- ” President Trump has said he will replace the IRS with the ERS (External Revenue Service) where taxation on goods will replace taxation on The People and their income.” Judy Byington, Restored Republic via GCR: Update as of February 17, 2025
Ms. Byington has repeatedly placed the following at the top of each one of her posts. “I encourage you to do your own research and make up your own mind as to what is happening in this great War of Good Against Evil.” All due respect to Ms. Byington and her amazing efforts, I offer that it would do everyone well to follow this advice and vet the “intel” provided for yourselves.
Here’s what my own research turned up.
- President Trump directed his Cabinet to explore the feasibility of creating an External Revenue Service to collect tariff revenues. To date, he has not said he will replace the IRS with an ERS.
- The President’s Executive Order does not eliminate the IRS or federal income taxes.
- Both creating an ERS agency and eliminating the IRS and income taxes, by law, would require Congress to pass laws authorizing the same.
While the idea of repealing federal income taxes and replacing them with external revenue sources is certainly appealing on the surface – I, for one, would prefer to keep my hard earned cash rather than send the Federal government 30-35% of it annually – it should be noted that, on average since 2017, external revenue (tariff income) has only accounted for approximately 2% of annual revenue or about $4.7 billion. I think we can agree these funds are hardly sufficient to replace the $2.18 trillion in income gleaned from income taxes.
Tariffs are not paid by foreign entities, they are paid by the US companies importing goods from foreign entities. It sounds good to say that we’ll have a 25% tariff on imported steel or aluminum, but one must realize that American companies are paying that “tax,” not the foreign entity. That “tax” ultimately gets passed on to the American consumer in the form of higher prices so the manufacturer can recover some or all of the tariff paid out. Do you really want to pay higher prices for your cars or refrigerators?
Finally, let’s take a look at the creation of the External Revenue Service, assuming Congress passes a law authorizing it. President Trump and Elon Musk are on a mission to downsize the Federal Government. Witness the massive layoffs. The Federal Government already has an agency in place responsible for collecting tariffs and import duties at the 328 =/- border crossings called Customs and Border Protection. How does creating yet another agency jive with the stated goal of reducing the size of the federal workforce and achieving efficiencies?
So, before we all get too excited about the possibility of no longer having to pay income taxes, let’s pump the brakes and realize that, if it happens at all, it’ll be down the road a bit and probably a good bit. Just because it’s been published on the Internet or posted on Social Media doesn’t mean it’s true!
