President Donald Trump is pursuing a major overhaul of the tax system that would eliminate income taxes and replace the IRS with a new revenue model based on tariffs, according to Commerce Secretary Howard Lutnick.
During an appearance on Fox News, Lutnick outlined Trump’s vision for what he called an External Revenue Service (ERS), which would shift the federal government’s financial reliance away from taxing American workers and onto foreign trade. The proposal would mean that instead of paying income taxes, revenue would be collected through tariffs placed on other nations and global entities.
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, explaining that the administration wants to ease the tax burden on American citizens. He also noted that Trump’s broader tax plan includes eliminating taxes on overtime, tips and income earned by senior citizens.
The idea aligns with Trump’s long-standing emphasis on using tariffs as an economic tool. Throughout his presidency, he has pushed for higher tariffs on foreign imports and renegotiated trade deals to secure what he describes as better terms for the United States.
If implemented, the plan would mark a significant departure from traditional taxation. While details on the transition from income tax to tariffs have not yet been fully outlined, Trump’s team has made clear that reducing taxes on Americans is a central priority.
The administration has positioned this proposal as a way to put more money in the hands of workers while making foreign countries contribute to U.S. government revenue through increased trade costs.
