If Donald Trump gets his way, it is possible that Americans may no longer be required to pay income taxes.
President Donald Trump has proposed doing away with federal income taxes in favor of an economic structure that is based on tariffs. He has cited the years 1870–1913 as an example of how the United States of America experienced growing prosperity during that time period.
He proposes the establishment of a new entity that would be known as the External Money Service (ERS) to manage tariffs and money from overseas. This would be done in an effort to reduce the amount of tax burden that is placed on Americans.
Putting Tariffs at the Center of Trump’s Plan for the Economy
At the 2025 Republican Issues Conference, which took place on January 27 at Trump National Doral Miami, President Trump had the opportunity to outline his economic plan to a gathering of Republican leaders. The goal of the gathering, which lasted for three days, was to shape his legislative agenda, as reported by Foreign Policy.
During his speech, Trump made reference to historical precedent, asserting that the United States of America had been prosperous before to 1913 without having an income tax and instead relied on tariffs. He referred to this period of time, which spanned from 1870 to 1913, as one of the most wealthy periods in the history of the nation.
He stated, “You know, the United States of America operated entirely on tariffs from the year 1870 until the year 1913, and that was the richest period in American history, according to relative standards.” It was his contention that the Tariff Commission of 1887 was given the responsibility of determining how to deal with the vast sums of money that were collected through tariffs.
There was so much money that they were at a loss for what to do with it all because it was so large. Through his position as a receiver, Teddy Roosevelt was able to make use of tariffs to support many initiatives, including national parks. “The first year that income taxation was implemented was 1913,” Trump continued.
The phrase “Tax not our people but foreign countries”
Trump is of the opinion that the United States ought to impose taxes on other countries in order to assist its own population, rather than taxing Americans in order to aid other countries. With a tariff-centric strategy, he believes that the United States of America has the potential to become “very rich again” “very quickly.”
The idea of replacing income taxes with tariffs is one that Trump has championed for a long time, and he continued to defend this position throughout his campaign for the presidency.
It is possible that tariffs may serve as a substitute for income tax in the United States.
United States Customs and Border Protection personnel are responsible for collecting tariffs at ports of entry. Tariffs are often calculated as a percentage of the total cost of the products that are being imported.
The majority of economists, on the other hand, continue to be skeptical of tariffs as a significant source of revenue. They argue that tariffs are an inefficient method of financing government activities and that they could eventually lead to higher prices for consumers.
Nevertheless, this idea has sparked debate among those who decide policy and those who study economics. As far as critics are concerned, tariffs are nothing more than import levies that are frequently passed on to customers in the form of increased prices. There is a possibility that households with lower and intermediate incomes will be disproportionately affected by this, which may cancel out any benefits that were obtained as a result of the elimination of income controls.
Additionally, the sustainability of relying solely on tariffs as a means of financing the federal government is called into doubt.
A tariff of ten percent is anticipated to bring in between three hundred and four hundred billion dollars annually, which is less than the four trillion dollars that would be required to maintain the current tax cuts for another ten years. Because of this imbalance, it may be necessary to make considerable adjustments to programs such as Social Security and Medicare in order to bring the budget into balance.
The proposition that was presented by the External Revenue Service
Trump’s proposal calls for the development of a new agency that will be known as the External Revenue Service (ERS). This will allow for the management of tariffs and the income that is generated from international commerce. The establishment of such an agency, on the other hand, would require the approval of Congress. There is a possibility that the idea will be passed into law given that Republicans control both the House and the Senate.
The idea has generated concerns about the expansion of the government due to the fact that President Trump, who has pledged to reduce the amount of bureaucracy in the federal government, would be forming an agency to take on activities that are presently being done by established organizations such as the Commerce Department and the United States Customs and Border Protection.
In contrast to the current Internal Revenue Service, which is in charge of collecting taxes from domestic sources, the proposed External Revenue Service would focus on collecting money from sources located outside of the country.
Trump’s economic strategy features significant tariffs as its central component.
As part of his bigger economic plan, President Trump has proposed imposing hefty tariffs, such as a tariff of sixty percent on goods imported from China and a possible tax of twenty-five percent on imports from allies such as Canada and Mexico. In addition to reducing the amount of taxes that residents of the United States are required to pay, the purpose of these measures is to raise domestic income.
Tariffs of this kind would almost certainly result in increased pricing for consumers, according to economists, because businesses typically pass on their expenses to their customers. There are still a lot of analysts who are skeptical about tariffs, and they argue that they are not an efficient approach to either raise money for the government or to encourage economic growth.
In conclusion, the concept poses significant concerns with regard to its economic impact, viability, and potential repercussions on consumers and government programs, despite the fact that its objective is to reduce taxes for Americans and increase national wealth through tariffs.
