President Donald Trump is working to phase out the federal income tax and replace the IRS with a system that funds the government through tariffs instead of taxing American workers, according to Commerce Secretary Howard Lutnick.
Lutnick, in an interview with Fox News, explained that Trump envisions an External Revenue Service (ERS) that would eliminate income taxes and instead generate funds from foreign governments and businesses. The proposal represents a dramatic shift in federal revenue collection, moving away from taxing U.S. citizens and placing the financial burden on global 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
“Tariffs are going to drive America better,” Lutnick said, adding that Trump’s approach aims to lower taxes for Americans across the board. The administration has also proposed tax relief measures, including eliminating taxes on tips, overtime and senior citizens’ income.
Trump’s economic policies have consistently emphasized the use of tariffs as a tool to strengthen the U.S. economy. His administration previously renegotiated trade agreements and increased tariffs on certain imports, arguing that the U.S. should no longer depend on income taxes to fund government programs.
The ERS plan aligns with Trump’s broader goal of restructuring how the federal government collects revenue. If implemented, it would mark one of the most significant overhauls of the U.S. tax system in history.
While details on the transition from the IRS to the ERS are still emerging, Trump has made it clear that tax relief for American workers remains a central part of his economic agenda.
