WASHINGTON, DC - President-elect Donald Trump continues to think "outside the box" about his upcoming administration. While some of his ideas may or may not be serious policy proposals, such as annexing Greenland and taking back the Panama Canal, his latest proposal could garner bipartisan support.
The New York Post reports that Trump is proposing a new agency, the External Revenue Service, to collect external revenue from foreign sources, such as tariffs.
“For too long, we have relied on taxing our Great People using the Internal Revenue Service (IRS). Through soft and pathetically weak Trade agreements, the American Economy has delivered growth and prosperity to the World while taxing ourselves,” Trump wrote on Truth Social.
“I am today announcing that I will create the EXTERNAL REVENUE SERVICE [ERS] to collect our Tariffs, Duties, and all Revenue that come from Foreign sources.”
Trump proposes the ERS would be established on the day he is inaugurated to “begin charging those that make money off of us with Trade, and they will start paying, FINALLY, their fare share.”
It is unknown whether the ERS would operate as a separate agency or under the auspices of another existing agency.
The president-elect has made raising tariffs on foreign countries the centerpiece of efforts to get America’s illegal immigration issue under control. He has promised to increase tariffs on foreign countries that don’t comply with his proposals. He has threatened to stop “business” with countries that don’t accept illegal aliens back who are deported from the US.
In addition, Trump has threatened to raise tariffs on Mexico and Canada to 25%, which most see as a negotiating tool. However, some partisan Democrats have claimed that this will increase Americans' prices for certain goods.
Besides Mexico and Canada, Trump has promised to levy a ten to twenty percent tariff on all foreign goods and up to a sixty percent tariff on Chinese imports. Trump’s rationale is to return manufacturing back to the U.S., which he says will jumpstart the sluggish economy.
The president-elect has several economic proposals that he believes will help everyday Americans. These include proposals to eliminate taxes on tips, overtime, and Social Security. He even mentioned the possibility of eliminating the federal income tax in exchange for a national sales or VAT tax, often called a “consumption tax.”
Currently, tariffs are collected under the authority of US Customs and Border Protection (CBP), which falls under the Department of Homeland Security (DHS). While creating a separate ERS agency would require congressional approval, the president-elect could put it under an existing agency.
Steve Bannon, a Trump ally, suggests that the ERS could be housed in the Treasury Department, reducing pressure on the IRS.
However, some question how duties or tariffs would be collected from foreign sources since they are currently collected from US importers, including Bryan Riley from the National Taxpayers Union, who pointed that out.
“It [the federal government] does not collect duty revenue from foreign sources, so it is not clear what the point of a new External Revenue Service would be,” Riley told The Post.
“A better priority would be to improve the operation of the Internal Revenue Service to better serve US taxpayers.”
Meanwhile, economist EJ Antoni of the Heritage Foundation praised the idea in a discussion with The Post.
“I really love this idea,” Antoni said. “Anything that gets us away from income taxes and towards tariffs is a great idea,” suggesting ERS come about through a “transformation” of a current agency into one that “would better serve” the American people.”
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