To investors,

Howard Lutnick, the new Secretary of Commerce, was on television last night discussing the administration’s goal of eliminating federal income tax. This is the type of big, bold thinking that can change the direction of a country.

Here is the clip:

It is important to understand what appears to be the playbook. DOGE is focused on cutting $2 trillion from the government budget. That would eliminate the current annual deficit and bring us very close to a balanced budget. The tariffs being levied would increase the government’s revenue, combined with Lutnick’s plan to create an additional $1 trillion of revenue from the government’s balance sheet, would lead to an annual surplus.

As soon as you get to a surplus, you can start to lower the tax rate of American citizens. I don’t see a world where the tax rate goes to 0% overnight, but we could see a slow, steady reduction over the next four years. We saw a reduction from 39.6% to 37% in 2018, which was obviously well received by Americans.

The most interesting part of this entire situation is that I don’t remember Trump or his team promising a balanced budget on the campaign trail. I don’t think they ever mentioned abolishing the federal income tax either. In fact, I spoke on numerous podcasts about my disappointment that neither major party candidate was even pretending they wanted to balance the budget.

But here we are.

The ramifications of this achievement would be profound. The simple increase in money available to hard-working families would be obvious, but you could see second order effects on stock prices (higher!), bitcoin (higher!), real estate (higher!), money market funds (higher!), etc.

According to prediction market Kalshi, the market is putting a 54% chance on Trump being able to reduce the national debt. On one hand, that is a much higher number than you would expect, but it is still far away from a near certainty.

Just as I continue to say the single most important thing in bitcoin is whether the United States creates a Bitcoin Strategic Reserve, I believe the most important thing for the long-term status of the US economy is whether the federal income tax is significantly reduced or not.

This single number represents the success or failure of so many other things — tariff program, External Revenue Service, national debt, interest rates, etc.

If I had to guess right now, we will not see federal income tax reduced to 0%. Instead, I could see a world where we get the rate reduced under 30% and long-term capital gains tax is dropped to 15%. These two reductions would increase investments in America and serve as a boom to the US economy.

It is a big, bold idea. But we need these types of ideas to get back on track. I don’t care who is in the White House — I want to see Americans with more money in their pocket and a country that is accelerating towards a bright future.

Hopefully that is what we are going to get. Have a great day. I’ll talk to everyone tomorrow.

- Anthony Pompliano

Founder & CEO, Professional Capital Management

This Bitcoin Bull Run Is Just Getting Started Says Abra CEO

Bill Barhydt is the Founder & CEO of Abra.

In this conversation we talk about bitcoin, regulation tailwinds, how we think about DeFi for institutions, memecoins, stablecoins, and what Bill is excited about in the future.

Enjoy!

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