Hedge Fund Manager Says Trump's Radical Tax Plan Is 'Hyperbole…Useful To Kick The Hornet's Nest': 'Not Going To Be A Plan That Works'

Renowned hedge fund manager and founder of Hayman Capital Management, Kyle Bass expressed skepticism over former President Donald Trump‘s proposal to replace income tax with import tariffs.

What Happened: On Friday, during CNBC’s “Last Call,” Bass shared that Trump’s proposal is not going to work out since the gap between the total volume of imports in the U.S. and the revenue from taxes is huge.

“Total volume of imports in the United States, last year, was $3.8 trillion. U.S. tax revenue last year was about $4.4 trillion. So even if you put a 100% tariff on everything that we import, we wouldn’t get there. And if you look at the budget estimates this year for tax revenues…it’s about $5.4 trillion. There is just no way to run an import tariff scheme to catch you to $5.4 trillion,” Bass explained.

“Hyperbole is useful to kick the hornet’s nest, but that plan is not going to be a plan that works.”

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Why It Matters: Bass’s comments come in response to Trump’s idea, which he floated to CEOs and lawmakers, of eliminating income taxes in favor of an “all tariff policy.”

Top economist Paul Krugman also shared his views on the matter through a series of posts on X. If Trump's proposal were to be implemented, the average tariff required to supplant the income tax would be 133%, said Krugman. "Believing that we can go back to those days is just ignorant."

Trump’s proposal marks a significant departure from conventional economic policy. Trump has been steering the Republican Party’s economic policy towards protectionism and tariffs in recent years.

During his presidency, Trump signed the 2017 Tax Cuts and Jobs Act (TCJA), which resulted in the largest overhaul of the tax code in decades. This act, which is set to expire in 2025, primarily benefited the highest earners.

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This story was generated using Benzinga Neuro and edited by Pooja Rajkumari