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By Aliss Higham
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Commerce Secretary Howard Lutnick has said that President Donald Trump wants to abolish the Internal Revenue Service (IRS) in favor of collecting revenue from foreign sources.
Why It Matters
The IRS is responsible for collecting federal taxes from individual and corporate taxpayers nationwide, and is the largest source of federal revenue. In 2024, the IRS collected $823 billion in individual taxes—amounting to 52 percent of total revenue, according to the Treasury Department.
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On the day of his inauguration, President Trump pledged to create an External Revenue Service to oversee tariffs, duties, and other foreign trade-related revenues as part of his "America First" trade policy.
What To Know
Speaking with Fox News host Jesse Watters, Lutnick, who was confirmed as commerce secretary earlier this week, said: "Think about it, Donald Trump announces the External Revenue Service, and his goal is very simple (...) his goal is to abolish the Internal Revenue Service and let all the outsiders pay."
Trump has previously said he wants to create the agency to make foreign trade partners "finally pay their share." He has not said he wishes to abolish the IRS.
Newsweek contacted the White House for comment via email outside of regular working hours.
On February 1, Trump signed executive orders imposing tariffs on almost all imports from Canada, Mexico and China. His actions were met with retaliatory threats of tariffs from all three nations.
Trump later agreed to hold off imposing 25-percent tariffs on Canada and Mexico for 30 days, while a tariff of 10 percent on Chinese imports has come into effect.
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The White House said the tariffs are in place due to "the extraordinary threat posed by illegal aliens and drugs," which "constitutes a national emergency."
Trump's most recent pledge on tariffs came on Tuesday, when he said he plans to impose auto tariffs "in the neighborhood of 25 percent" and similar duties on semiconductors and pharmaceutical imports.
What People Are Saying
President Donald Trump, writing on Truth Social on January 14: "For far 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. It is time for that to change. I am today announcing that I will create the EXTERNAL REVENUE SERVICE to collect our Tariffs, Duties, and all Revenue that come from Foreign sources. We will begin charging those that make money off of us with Trade, and they will start paying, FINALLY, their fair share. January 20, 2025, will be the birth date of the External Revenue Service. MAKE AMERICA GREAT AGAIN!"
Canadian Prime Minister Justin Trudeau said in a televised news conference in Montreal on February 19: "If ever there are tariffs brought in Canada, our response will be immediate and strong, but we don't want that. We are going to do the work to make sure they don't come on."
What's Next
The creation of a new federal agency will be subject to approval from Congress, where Republicans hold majorities in both the House of Representatives and the Senate. The creation of an External Revenue Service does not invalidate the operations of the IRS.
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