Quick summary
• President-elect Donald Trump proposed creating an “External Revenue Service” (ERS) to collect tariffs and other foreign revenue starting on January 20, 2025.
• Critics argue the ERS is a rebranding attempt to conceal plans for multitrillion-dollar tax cuts for the wealthy, with middle- and low-income Americans bearing the cost through increased prices.
• An Institute on Taxation and Economic Policy (ITEP) analysis found that tariffs would raise prices enough to offset any tax cuts for 95 percent of Americans, with the wealthiest 1% benefiting the most.
• Sen. Ron Wyden (D-Ore.) called Trump’s ERS plan a “multi-trillion-dollar tax hike on families and small businesses” to fund tax handouts for the rich.
• Trump is reportedly considering declaring a national economic emergency to justify imposing unilateral tariffs on foreign imports under the International Economic Emergency Powers Act.
• The proposed ERS overlaps with the duties of Customs and Border Protection, raising questions about why Trump is creating a duplicate federal agency after vowing to reduce government size.
• Trump has appointed Elon Musk and Vivek Ramaswamy to lead the Department of Government Efficiency (DOGE), tasked with cutting federal programs and firing government employees.
President-elect Donald Trump’s proposed creation of a new “External Revenue Service” (ERS) is raising alarms from lawmakers and policy analysts, who argue that the plan is a veiled attempt to fund massive tax breaks for the wealthy by imposing tariffs that will ultimately burden American families and small businesses.
The proposal, which Trump announced on his social media platform Truth Social, comes amid reports that he is considering declaring a national economic emergency to justify sweeping tariffs on foreign imports.
On Truth Social, Trump wrote, “We will begin charging those that make money off of us with Trade, and they will start paying, FINALLY, their fair share.” He added that “January 20, 2025, will be the birth date of the External Revenue Service.”
While Trump compared the ERS to the IRS, critics note that creating a new federal agency requires an act of Congress. According to The Washington Post, outside advisers to Trump have suggested that the ERS might involve renaming an existing office within the Treasury Department rather than establishing an entirely new agency.
Currently, U.S. Customs and Border Protection is responsible for collecting tariff revenue. Critics argue that creating the ERS would duplicate existing functions while expanding the size of the federal government, despite Trump’s campaign promises to reduce its scope.
Critics contend that Trump’s ERS proposal is part of a broader plan to fund multi-trillion-dollar tax cuts for the rich by imposing tariffs that will be passed on to consumers.
An analysis by the Institute on Taxation and Economic Policy (ITEP) found that the sweeping tariffs Trump has floated would result in price hikes that “would more than offset” the benefits of his proposed tax cuts for all but the wealthiest Americans.
According to ITEP:
• The richest 1 percent of Americans would receive an average tax cut of about $36,300.
• The next richest 4 percent would see an average tax cut of $7,200.
• Meanwhile, middle-income Americans would face an average tax increase of $1,500, and low-income Americans would see their taxes rise by $800.
Democratic lawmakers respond
Sen. Ron Wyden (D-Ore.), the top Democrat on the Senate Finance Committee, blasted Trump’s ERS plan, stating, “No amount of silly rebranding will hide the fact that Trump is planning a multi-trillion-dollar tax hike on American families and small businesses to pay for another round of tax handouts to the rich.”
Wyden’s remarks highlight growing concerns that Trump’s economic agenda is designed to benefit wealthy individuals and corporations at the expense of working-class Americans.
Reports from CNN suggest that Trump is considering declaring a national economic emergency to impose tariffs on foreign imports without congressional approval. The report states that Trump could invoke the International Economic Emergency Powers Act (IEEPA) to bypass traditional legal requirements for justifying tariffs based on national security grounds.
“The declaration would allow Trump to construct a new tariff program by using the International Economic Emergency Powers Act,” CNN reported. “Trump, one of the sources noted, has a fondness for the law, since it grants wide-ranging jurisdiction over how tariffs are implemented.”
Trump has also enlisted Elon Musk and Vivek Ramaswamy to lead the Department of Government Efficiency (DOGE), a non-governmental task force focused on reducing the federal workforce and cutting regulations. The task force is part of Trump’s “Save America” agenda, which aims to dismantle federal programs and fire government employees.
Economists have warned that Trump’s tariffs would be passed on to consumers in the form of higher prices, ultimately hurting American families and small businesses.
Trump’s proposed creation of an External Revenue Service and his broader economic agenda are sparking intense debate on Capitol Hill. While Republicans control both chambers of Congress, there is uncertainty about whether Trump’s proposals will gain traction, given the potential economic consequences.
To read more about Trump’s Agenda 47, click here.
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