President Donald Trump is working on a plan to eliminate income taxes and replace the IRS with a new system that funds the government through tariffs instead of taxing American workers, according to Commerce Secretary Howard Lutnick.
Lutnick, speaking on Fox News, described Trump’s vision for what he called an External Revenue Service (ERS), which would generate government revenue by imposing tariffs on foreign goods and businesses rather than collecting taxes from U.S. citizens. The plan seeks to remove the financial burden of taxation from American workers and place it on foreign trade partners.
If Trump is able to end income taxes, and the Democrats fight it, which they will, they will NEVER win another election!
Anyone disagree? pic.twitter.com/kBbU4hHzBF
— SaltyGoat (@SaltyGoat17) March 6, 2025
“Lower our taxes. No tax on tips. No tax on overtime. No tax on seniors,” Lutnick said, emphasizing Trump’s commitment to reducing the tax burden on working Americans. He noted that the administration sees tariffs as a way to shift government funding away from domestic taxation.
Trump has previously championed tariffs as a key tool in economic policy, increasing them on foreign imports and renegotiating trade deals to prioritize U.S. interests. His administration argues that foreign nations benefiting from access to U.S. markets should pay their share through tariffs rather than relying on income taxes from American workers.
If implemented, the shift from income tax to tariff-based revenue collection would represent one of the most dramatic changes in U.S. tax policy. The administration has positioned this proposal as a move to strengthen American workers while leveraging trade policies to fund government operations.
Details on how the transition would be structured have not yet been fully outlined, but Trump’s push for an alternative to the IRS is expected to be a major focus of his economic agenda moving forward.
