President-elect Donald J. Trump announced he intends to create a new revenue agency that will effectively end the need for the Internal Revenue Service (IRS), which oversees the federal taxation of Americans. Instead, the President-elect proposes an External Revenue Service (ERS), which will serve as the central point for collecting tariffs, duties, and other taxes and fees on foreign goods. This revenue source, he believes, will supplant the need for the federal income tax.
“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. It is time for that to change,” Trump wrote on Tuesday in a post on his Truth Social media platform. He continued: “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.”
“We will begin charging those that make money off of us with Trade, and they will start paying, FINALLY, their fair share,” the President-elect added.
In October last year, just days before the 2024 presidential election, Trump posited replacing the long-loathed federal income tax with a system of foreign tariffs and customs duties. The plan received enthusiastic backing from long-time IRS opponent and former Congressman Ron Paul (R-TX).
For most of the United States’ history, its major source of tax revenue was not the direct taxation of income but tariffs. Trump did not miss this point, remarking on that history in October: “It had all tariffs—it didn’t have an income tax.”
On the campaign trail, Trump repeatedly signaled his intention to swiftly enact broad-based tariffs against countries that have their own duties, tariffs, and fees on U.S. products or manipulate currency to tilt trade imbalances in their favor.