In a stunning announcement, former President Donald Trump revealed plans on Tuesday to establish a new federal agency, the External Revenue Service (ERS), designed to overhaul America’s taxation system. The ERS would focus on collecting tariffs and duties from foreign entities, potentially replacing the Internal Revenue Service (IRS) and eliminating income taxes for U.S. citizens.
This ambitious proposal is slated to take effect upon Trump’s potential inauguration on January 20, 2025, a date he described as the “birth date” of the ERS.
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Taking to his platform Truth Social, Trump shared his vision for a radical shift in how the United States generates federal revenue:
“For far too long, we have relied on taxing our Great People using the Internal Revenue Service (IRS). Through soft and pathetically weak Trade agreements, the American Economy has delivered growth and prosperity to the World, while taxing ourselves,” Trump wrote. “It is time for that to change. I am today announcing that I will create the EXTERNAL REVENUE SERVICE to collect our Tariffs, Duties, and all Revenue that come from Foreign sources.”
Trump added, “We will begin charging those that make money off of us with Trade, and they will start paying, FINALLY, their fair share. January 20, 2025, will be the birth date of the External Revenue Service. MAKE AMERICA GREAT AGAIN!”
The cornerstone of Trump’s proposal is a shift away from income taxes toward a revenue system based on tariffs and duties collected from foreign trade partners. By taxing foreign goods and services, Trump argues that the U.S. can alleviate the financial burden on American citizens while promoting fairness in international trade.
While details remain scant, the concept has energized Trump’s supporters, who view it as a long-overdue effort to reduce the IRS’s power and eliminate income taxes. Critics, however, have raised concerns about whether tariff revenues alone could sustain federal expenditures.
The fate of the IRS under this plan is unclear. Trump has not provided specific details about whether the agency would be abolished or dramatically restructured.
In a surprising twist, Elon Musk, who has been appointed co-head of Trump’s proposed Department of Government Efficiency, has pledged to audit the IRS as part of the broader initiative to hold government agencies accountable.
Musk recently commented on the agency’s perceived overreach, stating, “The IRS has become a weapon against hard-working Americans. Our mission is to bring transparency and efficiency to a system that has failed the people it serves.”
Musk’s involvement in the initiative has added significant attention to Trump’s proposal, with many speculating about what further changes the billionaire entrepreneur might champion.
The IRS has faced growing criticism under the Biden administration, which allocated an additional $80 billion to expand the agency’s operations. Proponents of this expansion argue it was necessary to enhance tax enforcement and close loopholes, but critics claim it has disproportionately targeted middle-class Americans while leaving the wealthy largely unaffected.
Trump’s proposed ERS aims to reverse this trend, positioning itself as an agency that shifts the tax burden away from citizens and onto foreign entities benefiting from U.S. trade.
While Trump’s proposal has stirred excitement among his supporters, it faces significant logistical and political hurdles. Federal revenue from tariffs has historically been insufficient to replace income taxes entirely, raising questions about how the government would fund essential programs and services.
Additionally, implementing such a sweeping reform would likely require Congressional approval and could face strong opposition from both Democrats and establishment Republicans. Legal challenges may also arise, particularly from industries that could be adversely affected by increased tariffs.
Economists have also warned about the potential risks of over-reliance on tariffs, including the possibility of trade wars and retaliatory measures from foreign governments. Such actions could disrupt international markets and lead to higher costs for American consumers.
Despite the uncertainties, Trump’s announcement underscores his commitment to fundamentally reshaping the U.S. tax system. The ERS proposal aligns with his broader economic philosophy, which emphasizes American sovereignty, reduced government overreach, and fairer trade practices.
Supporters argue that this approach could incentivize better trade agreements while providing relief to American taxpayers. Critics, however, caution that the plan’s success depends on its ability to generate sufficient revenue without causing unintended economic consequences.
As January 20, 2025, approaches, the proposed ERS has become a focal point of Trump’s campaign. Whether the plan is feasible or politically viable remains to be seen, but it has already sparked heated debate about the future of taxation in America.
For Trump’s supporters, the creation of the ERS represents a bold step toward reducing government interference in their lives. For his critics, it is a risky gamble with potentially far-reaching consequences.
What’s certain is that Trump’s vision for the ERS has reignited conversations about the role of government, taxation, and trade in shaping America’s future. With Elon Musk and other high-profile figures joining the effort, the coming years could bring unprecedented changes to the nation’s economic and political landscape.