Trump Proposes Replacing IRS with Tariff-Based 'External Revenue Service'

The plan aims to eliminate income taxes by relying on tariffs, but economists warn of significant economic and logistical challenges.

Commerce Secretary Howard Lutnick announced that President Trump intends to abolish the IRS and replace it with an 'External Revenue Service' focused on collecting tariffs and duties.
The proposal suggests funding the federal government through tariffs on imported goods, but experts caution this would require extremely high tariffs, potentially exceeding 100% on all imports.
Economists argue that such high tariffs could drive up consumer prices, reduce demand for imports, and ultimately fail to generate sufficient revenue to replace income taxes.
The plan has sparked concerns about economic repercussions, including potential trade retaliation from key partners like Canada, Mexico, and China, which have already issued warnings.
The IRS is reportedly preparing to lay off thousands of workers, raising questions about the future of tax collection as the new proposal faces significant hurdles, including congressional approval.