President Trump's proposal to eliminate the federal income tax raises concerns over potential economic impacts, particularly on inflation and housing affordability. While it might increase disposable income, experts warn it could lead to surging demand, thereby driving prices upward and risking inflation. This scenario mirrors the post-pandemic economy, where excess cash and spending led to significant inflation. Additionally, Trump suggested a shift to a consumption tax, which has its own implications for American consumers and the economy.
Eliminating the income tax might initially put more money in American pockets, but it risks driving up inflation and mortgage rates so high that the market collapses.
A sudden increase in disposable income across a majority of Americans could fuel rapid spending, leading to increased demand, driving prices upward, and triggering inflation.
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