February 10, 2025 • 22 mins
What if I told you income tax, as we know it, could disappear forever? That’s exactly what President-elect Donald Trump is suggesting with his groundbreaking announcement of the External Revenue Service—a plan to stop taxing Americans and start collecting revenue from foreign trade instead. This isn’t just a small tweak, but rather a complete rewrite of the U.S. taxation system that could be the solution to freeing Americans from income tax, and… it’s not just some crazy idea, its actually taking things back to how they were in the past. In this video, I will break down: the details of Trump’s ERS proposal, what this would mean for the US and the rest of the world, and… what the probability of something like this going through is and what to expect. So stick around—this could be one of the most important financial shifts of our lifetime.
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Speaker 1 (00:00):
Do you hate giving up a big chunk of your
paycheck for income taxes? Well, what if I told you
that income tax as we know it could disappear forever. Well,
that's exactly what the new incoming president, Donald Trump is
suggesting with the groundbreaking announcement of what he's called the
External Revenue Service. Now, the plan is to stop taxing
American citizens and to start collecting revenue from foreign trade instead.
(00:23):
Now this isn't just a small tweak. This would be
a complete rewrite of the entire US taxation system that
could be the solution to freeing Americans. Now, it's not
just some crazy idea, it's actually taking things back to
how things were in the past. So in this video,
I'm going to break down the details of Trump's ERS proposal,
what this would mean for the US, what it could
(00:45):
mean for the rest of the world, what the probability
of something like this even going through is, and of
course what to expect and what we can do regardless
of what happens. So make sure you stick around because
this could be one of the most important financial shifts
of our lifetime. So let's go. All right, we're jumping
right in. We're going to talk about this new proposal
(01:05):
by President Trump, and hang on before you may turn
this video off because maybe you're not from America, not
from the United States. This matters, right, This is going
to change the entire globes trade and how this works.
And so make sure you stick around to the end,
regardless if this affects you as an American citizen or not.
But you probably heard, whether you're an American or not,
of the IRS, which is the Internal Revenue Service, which
(01:28):
was started in nineteen thirteen. We'll talk about that in
a second. But he is now proposing the creation the
formation of the ERS, which is instead of internally revenue service,
is an external revenue service. Now, this is the I
for the E. Now this started with his tweet that
went out right here, and actually, you know it didn't
really start here, but let's let's start here. Okay. So
(01:49):
we put out a tweet. For far too long, make
America gradi and for far too long, we the American people,
have relied on taxing our great people, the very fine people.
They're so fine find people right, taxing are great people
using the Internal Revenue Service, the IRS. He says that
I will create Donald Trump will create the external all
(02:10):
in caps External Revenue Service to collect tariff's duties and
revenue from there. Starting January twentieth, twenty twenty five, will
be the birthdate of the ERS External Revenue Service to
make America great again. So this is happening. This is
gonna happen, at least is what he is saying is
going to happen. Now. Basically what he's proposing is instead
of taxing the great American people, as he said, let's
(02:32):
get money from external people, external people ers that are
shipping money in. So this is basically tariffs or taxes.
And the reason why I say this didn't just start
with his announcement is because during his first term he
started to increase tariffs on country shipping stuff in. I'll
break all this down for you what this means now,
just to say, like again, this didn't just start here,
(02:52):
started back when he started doing tariffs, and of course
as he was on the campaign trail running to become president,
he started talking about this as a man. Matter of fact,
if we go back to look at some of the stuff,
he pledged during the twenty twenty four campaign to impose
import taxes tariffs of ten percent to twenty percent on
all FOURG and goods, So ten and twenty percent across
(03:14):
the board. We'll come back and show you what twenty
percent means a little bit later, but basically across the
board taxing stuff ten and twenty percent with tariffs, and
up to sixty percent on Chinese goods. So he's like, hey, look,
these guys are taking American jobs. They're sending low price
stuff over here, subsidizing even their stuff maybe at some point,
and we're destroying an American economy. We're not getting any money
(03:35):
out of this, and so he wants to stop that.
He wants to increase tariffs and bring all of that back,
and I'll show you what the impact of all that means. Now,
tariffs or taxes. At some point, the government needs to
have money, right, so where are they going to get
it from? And I say right, because let's take a
look at that. Okay. So first of all, there has
(03:57):
some historical precedence for this, so it's not like this
some hair brained idea. He's pulling this back from historical precedence.
So before we had the i RS, which was formed
in nineteen thirteen, the United States funded itself in a
completely different way. As a matter of fact, other nations
today even do that as well. Let's hear from President
(04:18):
Trump on this exact thing as he was on Joe Rogan.
Let's play that.
Speaker 2 (04:22):
Club unless they pay a big price, and the big
price is tariffs. And he'd speak like that, but he
was right. And then around in the early nineteen hundreds
they switched over stupidly to frankly an income text. And
you know why because countries were putting a lot of
pressure in America, we don't want to pay tariffs, please,
don't you You.
Speaker 1 (04:41):
Know they believe me.
Speaker 2 (04:42):
They control our politicians. We had a commission meeting in
the eight I think it was eighteen eighty seven, think
of this problem. We were so rich, we had so
much money. We didn't know what to do. So they
set up a Blue Ribbon Commission on te tariffs and
the sole purpose is what to do with all the
(05:04):
money we had. We were so rich because we were
taxing other people for coming in and taking our jobs.
And China does it does what China did. If you
want to open a factory and sell cars, if you
build a factory here or have a factory, they don't
take our cars. They wouldn't take our cars. But if
you build a plant in China, you can do.
Speaker 1 (05:25):
That, all right. So you heard it directly from President
Trump's mouth that there used to be a different system.
We used to tax goods that came into the service
and that would pay for the government to run. As
a matter of fact, he said that there was such
a big account, there was so much money. A ninety
five percent of all income for the government came from
those tariffs at that time. Now again, you know, we
(05:48):
can see headlines that are saying like, well, how did
that happen. I'm going to break that down for you,
but just to kind of show you some of the numbers,
we can jump on Wikipedia. I don't really like the
framing of this, but we can see that tariffs has
played a key role in the trade policy of the
United States. Their purpose was to generate revenue for the
federal government. Obviously that's what Trump was just saying. Says
(06:08):
here it was aimed to reduce the trade deficit and
the pressure of foreign competition. So again, he doesn't want
the other countries subsidizing their goods, sending cheap goods into
the country, and then decimating our industrial base, our economy.
Between eighteen sixty one and nineteen thirty three, they had
one of the highest average tariff rates on manufacturing imports
in the world. So before the creation of the Federal Reserve,
(06:31):
that's how that was done. Now this sort of like
pay to play, not live. That's what Trump was saying.
So like instead of like people having to pay, Americans
having to pay to live. How about these countries or
companies pay to play. If they want to sell goods
in they should pay, not the American people. Is that
(06:52):
good or bad? Well, this thing is good bad. There's tradeoffs.
So I'm gonna show what those trade offs are. But
we can see her here and tell World War one
tariffs to around fifty percent. So up to the creation
of the Federal Reserve, they were or the irs and
the Fellers are at the same time ninety five percent.
By World War One they're down to fifty percent, and
then they went to zero zero. Today tariff revenues account
(07:13):
for very little US revenue, very little. However, they're double
what it was pre Trump. Because again Trump was the
one that kind of got this going, this whole ball
going again. Now I want to show you about the
trade offs, and I'm want to show you the probability
if this is even going to matter, and what it
means for us either way. But before we do, I
want to you show you that this is not just
old history. This is not just the way it was
(07:35):
done pre you know, creation of the Federal Reserve or
the irs. As a matter of fact, you might notice
that other countries, and if you're watching from another country,
you might be living in a no income tax area
as a matter of fact. Before I jump in to
break this down for you, let's hear from another president
of a nation, President of Ukley of El Salvador. Let's
see what he has to say.
Speaker 3 (07:55):
When I talk to my conservative friends right here, they
always tell me that the problem is high taxes.
Speaker 1 (08:02):
That they are wrong.
Speaker 3 (08:05):
Of course, high taxes are extremely high here in the
United States.
Speaker 2 (08:09):
I give you that you're right.
Speaker 3 (08:10):
In that that's not the real problem. The real problem
is not the high taxes themselves, but the fact that
they are not even really funding the government.
Speaker 1 (08:23):
So you heard it from President Mukaey there. He says that,
of course the taxes are very high in America, some
of the highest in the world, but that's not the problem.
The problem is that what are the taxes even being
used for We are under this illusion that we're paying
taxes to fund the government. But he said that that's
not even the case. So let's take a look at
that for example. Now, before we dig into the nittigrity
(08:44):
of the math again, there's other nations that are doing this,
the UAE, United Aram Rights, Dubai, Abu Dhabi, et cetera, Bahamas, Cayman's, Monaco, Qatar.
We could go on now. I was recently in Dubai
and Abu Dhabi. I was speaking at the big Bitcoin
conference that was going on over there, and I went
and I visited Dubai and I put up a tweet
on my Twitter account, which, by the way, if you're
(09:06):
not following me, check it out. I put more play
by a play on there and I said something just
like I said, Hey, coming from California, which is the
highest tax state in the nation of the United States,
a small business owner, are you buried in all types
of work keeping you from the real thing that makes
you money. Well, that's where Just Works comes in. They're
the all in one platform that supports small business growth.
(09:28):
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(09:50):
Just Works empowers all kinds of small businesses with real
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join the thousands of small businesses trust just Works to
take care of payroll, benefits, compliance and more. Again that's
just Works dot com slash Podcasts. It's pretty interesting coming
(10:10):
from the highest tax state and looking at Los Angeles
with probably the worst infrastructure. The roads are falling apart,
the buildings are falling apart. You have the biggest homeless
problem that's there, and there's not one single crane up
in the sky. You can tell a lot about the
economy of a city by how many cranes are there,
how much development's going on. And I said over in
Dubai there's no income tax, and yet the city is
(10:31):
probably the cleanest city that I've ever seen in my life.
The infrastructure is amazing. I'd call it magnificent. That's only
word I could think of, and there's cranes everywhere. There's
no tax. So I was just saying, it's interesting to
understand that, and I got blown up. I didn't know
you could say I couldn't say good things about Dubai.
And everyone said, well, that's because they use slaves, that's
(10:51):
because they've stolen all the oil from the land, all
these different things, and none of that's true. Well, maybe
they did use oil at one point, but today Dubai
has no income tax and they have almost no less
than one percent of their GDP comes from oil. So
where do nations like Dubai or Bahamas or came into Monica.
(11:13):
Where do they or how do they fund the government
without tax without income taxes? Well, there's always going to
be taxes. The government has to receive money, but it
doesn't have to come from income. There's a lot of
tax that we pay. So for example, in Dubai, there's
the five percent vat tax. Okay, So that's sort of
like in the United States, we have a sales tax,
and so that tax happens every time there's a transaction happening.
(11:36):
And then businesses also pay nine percent, so a nine
percent corporate tax rate, which of course, is way less
than the United States as well. So that's how sort
of things like that happen. Now we can see in Dubai.
The reason why I which twenty es Dubai is, like
I said, I was recently there, twenty six percent comes
from wholesale and retail trade, twelve percent from logistics. They
have a big tourism industry here, this is only five percent.
(11:59):
That's much now real estate manufacturing, and so all of
these sectors pay in money through that nine percent corporate rate.
But the thing to understand here is that why are
all those businesses there. What Dubai did is that, hey,
we're going to compete with the rest of the world
and we'll attract capital. So by being very pro business
and very pro capitalism, all these companies have been coming
(12:21):
this set up there, and then they benefit from taxing
those companies, albeit at a very much lower rate than
what the United States does. And so we've seen that
it's not just a dream, it's not just history. It's
actually happening right now. Now back to President Bukayley's comments
about your taxes or American's taxes not really funding their government.
(12:42):
This is a chart from the government from the Congressional
Budget Office. And what this is showing is the deficit,
and the deficit is obviously the difference between what the
government's spending and what they're bringing in from taxes. And again,
income taxes is part of the taxes. There's all kinds
of other taxes, right, so business taxes and property taxes
and sales taxes and capital gains taxes, on and on. However,
(13:05):
the problem is that the government continues to spend more
and more and more and more and more than they collect.
We're spending about two trillion more than what they're bringing in,
and per the government's CBO, they project that gap, that
deficit gap to get bigger and bigger and bigger. So
two trillion more than they're spending, two trillion more than
they bring in, and then it will be two and
(13:26):
a half and then three and then four. And so
if they're spending an extra two trillion dollars, again back
to Bekayley's comment, what do they need our money for?
Where are they getting that money? And they show you, well,
it's debt. So this is the line of where we're
at today and this is what they project the debt
levels to go up to, And I just want to
bring out one point. I wrote a book called The
(13:48):
Uncommunist Manifesto, the best selling book on Amazon. I'll link
to it down below. You should check it out, The
Uncommunist Manifesto. But in Karl Marx's book, Marxist book called
the Communist Manifesto, he laid out ten points of communism.
And I'll just let you know that right here. Number
two a heavy progressive or graduated income tax. It's a
(14:10):
Marxist idea. I'd also let you know number five is
a central bank. So it wouldn't be a big surprise
that both the IRS, the taxation system, and the central bank,
the FED, we're both created at the same time in
nineteen thirteen. Both of them are Marxist ideas. So back
to Bukaya's comment, why does the government take your money?
You think you're funding the government, but you're not, So
(14:31):
then why are we paying such heavy income taxes? It's Marxism,
it's redistribution. That's a whole nother comment, a whole nother conversation.
If you want me to do a video on that,
let me know down in the comments down below. Otherwise,
go chack. Got that book. But let's talk about the
pros and cons of this, and then we'll talk about
could this really happen? And what I think is going
to happen? All right, so potential shock. So what a
(14:51):
lot of people are saying is obviously the pro would be, well, shoot,
if we got more revenue from trade, that's good for
the government. So there's more money coming in. All the
businesses and companies and countries that are sending stuff into
the US, they pay a little bit. The US has
more money. That's great. That might mean also less taxes
for citizens. I would love it if my income tax
(15:13):
were to go down or obviously completely go away altogether.
That'd be amazing. So pro more income for the government.
Pro more income for me. I could keep more of
my income. Now, it's important to understand Howser's law. I
talk about this quite often. And the interesting thing about
Houser's law is there's only so much money to go around.
There's only a pie. Now the pie could get bigger
(15:34):
or smaller, but we have to divide up that pie.
And so basically the way it works is kind of
common sense. If you were to keep one hundred percent
of your money, you would have more money to spend
and invest. If you keep zero of your money, if
they took all of it, you would have no money
to spend an invest. So everything else is just a spectrum.
You have to understand. The government cannot spend something it
(15:56):
has not taken from you. It just reaches. Now it
can take money, as in debt from the future. It
could do that. But Perhauser's law, it shows that regardless
of what the tax rate is ten percent or ninety percent,
the percentage of the pie of GDP stays about the same,
about nineteen percent. So when taxes go down, the pie
(16:19):
gets bigger. When taxes go up, the pie gets smaller,
but the percentage of revenue to the pie of GDP
stays about the same. All right, So that's Houser's lot.
But back to the potential shock. So the pros sound good,
less taxes for me, more revenue for the government. The
cons could be well. Higher costs for imported goods, so
we import a lot of goods, and so we can
(16:41):
see the prices of all those things go up. That's inflation.
That means your money doesn't buy as much as it
used to. That could be bad, bad for you. We
could also see potentially retaliatory tariffs. So if the US
were to slap tariffs on other nations, then another nations say, okay, fine,
then we'll slap tariffs on your stuff. But here's the
thing about this, I think this part's overblown in my opinion,
(17:02):
and the reason why is that most other nations already
have tariffs. They have all types of duties, import duties,
and vat taxes. Like I've been sendenced a bunch of
stuff down to Mexico for my house that I built
down there, but I'm paying this enormous rate every single
time I shift something down there, So we're already having
that on top of that. The US is a net importer.
(17:23):
We don't export much stuff, but number one thing we
export is our own financial services, our Internet services. You
might already say there's tariffs on those the EU. I
think Zuckerberg was on Rogan recently, and I think he
said that the tech companies have been fined like thirty
billion dollars in just the last five or ten years.
That's sort of like a tariff. So we export financial services,
(17:44):
internet services, and energy. So really, I don't think this
is a big risk. All right, Now, let's think about
the probability of something like this going through in one
hundred percent or partially, and what that means for us. So,
first of all, as you might imagine, they're going to
be massive hurdles in Congress, but not just Congress, Like
there's an entire irs you know, deep state operation. You
(18:07):
have all the attorneys that make money from tax attorneys
and all of that, that whole complex, if you will.
They're going to fight that. They don't want that to
go through. Obviously, they want to keep that in place.
The Marxist organization wants to stay there. Now, what's the
probability of it actually replacing the income tax? Well, if
you think that the income tax is still needed by
the government, then what's the probability of that. Let's look
(18:30):
at some of the let's look at some of the math. Now,
as I said, right, Trump pledged to do that. He's
also pledged to do a bunch of other things with taxes. So,
for example, he's vowed on the campaign tilt to up
in the tax structure by no taxes on tips, so
get rid of that. That's pretty good. Overtime, no tax
on overtime, no tax on social security. So a lot
of things like that, even floating the elimination of the
(18:52):
federal income tax altogether, which is this this Although, like
I said, there's going to be a lot of pushback. Now,
I do want to just point out again, and this
is Trump's second term. So in his first term, he
did a ton of tax reform. As a matter of fact,
President Trump achieved the biggest tax cuts and reforms in
American history, many of which I'm still loving and using today.
(19:13):
But they're dwindling down, like, for example, accelerated depreciation, bonus depreciation.
It's a big one. And so I just want to
point out in his first term he did enormous tax cuts.
And so you know he's a man of his order.
He said he's gonna do some of this stuff. I
would expect a lot of this to go through. At
what level, Well, let's look at some of the probability
of this. Let's look at some of the numbers. So
(19:34):
we can see here that if we were going to
put a twenty percent tariff on all imported goods, what
dent would that put into the income tax that he
wants to get rid of. Well, we can see total
imports last year twenty twenty four were three point eight
trillion dollars right now, the federal revenue. The federal government's
total revenue for the same year was five trillion dollars.
(19:58):
So if we were to take twenty percent of the
total imports three point eight trillion, that is about seven
hundred and sixty six billion dollars. That's the twenty percent
across the board. Now, if we do the math, that's
only about fifteen point six percent of the government's total revenue.
So it doesn't really make up for the whole thing.
That's assuming that they need that money from us and
(20:20):
they're just not going to spin it off now. I
also like to point out the betting markets. I look
at them regularly. Now. Currently there's not a betting market
opened for this. Specifically, if we'll have tariffs replace income taxes,
I'd love to see someone spin that up. But currently
we do have three different proposals that we're betting on
in regards to Trump and tax policies. So, will Trump
(20:42):
end taxes on tips as he sort of said he
would right now, the betting markets say there's a thirty
three percent chance of that going through. Will Trump cut
corporate taxes in twenty twenty five there's a sixty percent
chance of that going through. And will Trump cut taxes
on high earners in twenty twenty five, then there's a
twenty one chance. So corporate taxes sixty percent better than average.
(21:04):
The rest are below average on that point. So that's
what the sort of probabilities are of this going through.
Now what does this mean for us either way? Well,
a couple things. It means Number one, pretty much expect
higher prices, all right, So there's gonna be some tariffs.
Maybe they're not going to be across the board like
he said, maybe they won't be as high, but he's
going to increase them. We know that because he did before,
(21:25):
and he's gonna at least follow through some of that.
So that's going to be higher prices no matter what,
even if there's not this retaliatory you know, potential retaliatory
risk that people see, it's going to mean higher prices.
Expect for that. It's also going to mean lower taxes.
So we're gonna have some tariffs. It's going to bring
prices up. We're also going to have tax cuts, so
(21:47):
will bring taxes down. Now we don't know if it's
going to be one hundred percent but there's going to
be some blend of that, so be prepared for that.
I do want to just let you know one other
thing though, that regardless of what happens, we all have
the ability to bring down the amount of taxes that
we pay by using all types of incentives that the
government puts in place. So the tax code is complex
(22:09):
and it favors investors not consumers. So if you're just
a W two earner that just watches TV and sets
in your mom's basement, you don't get a lot of
breaks or incentives from the government. But if you buy
a house, or you build a business or things like that,
then you do get a lot of incentives to lower
your taxes this way. So if you want to learn
more about that, I have a whole video right here
(22:31):
that you can go watch on that. Otherwise, let me
know what you think. Do you think this goes through?
Leave it in the comments down below, and that's what
I got. All right, to your success. I'm out
Do you hate giving up a big chunk of your
paycheck for income taxes? Well, what if I told you
that income tax as we know it could disappear forever. Well,
that's exactly what the new incoming president, Donald Trump is
suggesting with the groundbreaking announcement of what he's called the
External Revenue Service. Now, the plan is to stop taxing
American citizens and to start collecting revenue from foreign trade instead.
(00:23):
Now this isn't just a small tweak. This would be
a complete rewrite of the entire US taxation system that
could be the solution to freeing Americans. Now, it's not
just some crazy idea, it's actually taking things back to
how things were in the past. So in this video,
I'm going to break down the details of Trump's ERS proposal,
what this would mean for the US, what it could
(00:45):
mean for the rest of the world, what the probability
of something like this even going through is, and of
course what to expect and what we can do regardless
of what happens. So make sure you stick around because
this could be one of the most important financial shifts
of our lifetime. So let's go. All right, we're jumping
right in. We're going to talk about this new proposal
(01:05):
by President Trump, and hang on before you may turn
this video off because maybe you're not from America, not
from the United States. This matters, right, This is going
to change the entire globes trade and how this works.
And so make sure you stick around to the end,
regardless if this affects you as an American citizen or not.
But you probably heard, whether you're an American or not,
of the IRS, which is the Internal Revenue Service, which
(01:28):
was started in nineteen thirteen. We'll talk about that in
a second. But he is now proposing the creation the
formation of the ERS, which is instead of internally revenue service,
is an external revenue service. Now, this is the I
for the E. Now this started with his tweet that
went out right here, and actually, you know it didn't
really start here, but let's let's start here. Okay. So
(01:49):
we put out a tweet. For far too long, make
America gradi and for far too long, we the American people,
have relied on taxing our great people, the very fine people.
They're so fine find people right, taxing are great people
using the Internal Revenue Service, the IRS. He says that
I will create Donald Trump will create the external all
(02:10):
in caps External Revenue Service to collect tariff's duties and
revenue from there. Starting January twentieth, twenty twenty five, will
be the birthdate of the ERS External Revenue Service to
make America great again. So this is happening. This is
gonna happen, at least is what he is saying is
going to happen. Now. Basically what he's proposing is instead
of taxing the great American people, as he said, let's
(02:32):
get money from external people, external people ers that are
shipping money in. So this is basically tariffs or taxes.
And the reason why I say this didn't just start
with his announcement is because during his first term he
started to increase tariffs on country shipping stuff in. I'll
break all this down for you what this means now,
just to say, like again, this didn't just start here,
(02:52):
started back when he started doing tariffs, and of course
as he was on the campaign trail running to become president,
he started talking about this as a man. Matter of fact,
if we go back to look at some of the stuff,
he pledged during the twenty twenty four campaign to impose
import taxes tariffs of ten percent to twenty percent on
all FOURG and goods, So ten and twenty percent across
(03:14):
the board. We'll come back and show you what twenty
percent means a little bit later, but basically across the
board taxing stuff ten and twenty percent with tariffs, and
up to sixty percent on Chinese goods. So he's like, hey, look,
these guys are taking American jobs. They're sending low price
stuff over here, subsidizing even their stuff maybe at some point,
and we're destroying an American economy. We're not getting any money
(03:35):
out of this, and so he wants to stop that.
He wants to increase tariffs and bring all of that back,
and I'll show you what the impact of all that means. Now,
tariffs or taxes. At some point, the government needs to
have money, right, so where are they going to get
it from? And I say right, because let's take a
look at that. Okay. So first of all, there has
(03:57):
some historical precedence for this, so it's not like this
some hair brained idea. He's pulling this back from historical precedence.
So before we had the i RS, which was formed
in nineteen thirteen, the United States funded itself in a
completely different way. As a matter of fact, other nations
today even do that as well. Let's hear from President
(04:18):
Trump on this exact thing as he was on Joe Rogan.
Let's play that.
Speaker 2 (04:22):
Club unless they pay a big price, and the big
price is tariffs. And he'd speak like that, but he
was right. And then around in the early nineteen hundreds
they switched over stupidly to frankly an income text. And
you know why because countries were putting a lot of
pressure in America, we don't want to pay tariffs, please,
don't you You.
Speaker 1 (04:41):
Know they believe me.
Speaker 2 (04:42):
They control our politicians. We had a commission meeting in
the eight I think it was eighteen eighty seven, think
of this problem. We were so rich, we had so
much money. We didn't know what to do. So they
set up a Blue Ribbon Commission on te tariffs and
the sole purpose is what to do with all the
(05:04):
money we had. We were so rich because we were
taxing other people for coming in and taking our jobs.
And China does it does what China did. If you
want to open a factory and sell cars, if you
build a factory here or have a factory, they don't
take our cars. They wouldn't take our cars. But if
you build a plant in China, you can do.
Speaker 1 (05:25):
That, all right. So you heard it directly from President
Trump's mouth that there used to be a different system.
We used to tax goods that came into the service
and that would pay for the government to run. As
a matter of fact, he said that there was such
a big account, there was so much money. A ninety
five percent of all income for the government came from
those tariffs at that time. Now again, you know, we
(05:48):
can see headlines that are saying like, well, how did
that happen. I'm going to break that down for you,
but just to kind of show you some of the numbers,
we can jump on Wikipedia. I don't really like the
framing of this, but we can see that tariffs has
played a key role in the trade policy of the
United States. Their purpose was to generate revenue for the
federal government. Obviously that's what Trump was just saying. Says
(06:08):
here it was aimed to reduce the trade deficit and
the pressure of foreign competition. So again, he doesn't want
the other countries subsidizing their goods, sending cheap goods into
the country, and then decimating our industrial base, our economy.
Between eighteen sixty one and nineteen thirty three, they had
one of the highest average tariff rates on manufacturing imports
in the world. So before the creation of the Federal Reserve,
(06:31):
that's how that was done. Now this sort of like
pay to play, not live. That's what Trump was saying.
So like instead of like people having to pay, Americans
having to pay to live. How about these countries or
companies pay to play. If they want to sell goods
in they should pay, not the American people. Is that
(06:52):
good or bad? Well, this thing is good bad. There's tradeoffs.
So I'm gonna show what those trade offs are. But
we can see her here and tell World War one
tariffs to around fifty percent. So up to the creation
of the Federal Reserve, they were or the irs and
the Fellers are at the same time ninety five percent.
By World War One they're down to fifty percent, and
then they went to zero zero. Today tariff revenues account
(07:13):
for very little US revenue, very little. However, they're double
what it was pre Trump. Because again Trump was the
one that kind of got this going, this whole ball
going again. Now I want to show you about the
trade offs, and I'm want to show you the probability
if this is even going to matter, and what it
means for us either way. But before we do, I
want to you show you that this is not just
old history. This is not just the way it was
(07:35):
done pre you know, creation of the Federal Reserve or
the irs. As a matter of fact, you might notice
that other countries, and if you're watching from another country,
you might be living in a no income tax area
as a matter of fact. Before I jump in to
break this down for you, let's hear from another president
of a nation, President of Ukley of El Salvador. Let's
see what he has to say.
Speaker 3 (07:55):
When I talk to my conservative friends right here, they
always tell me that the problem is high taxes.
Speaker 1 (08:02):
That they are wrong.
Speaker 3 (08:05):
Of course, high taxes are extremely high here in the
United States.
Speaker 2 (08:09):
I give you that you're right.
Speaker 3 (08:10):
In that that's not the real problem. The real problem
is not the high taxes themselves, but the fact that
they are not even really funding the government.
Speaker 1 (08:23):
So you heard it from President Mukaey there. He says that,
of course the taxes are very high in America, some
of the highest in the world, but that's not the problem.
The problem is that what are the taxes even being
used for We are under this illusion that we're paying
taxes to fund the government. But he said that that's
not even the case. So let's take a look at
that for example. Now, before we dig into the nittigrity
(08:44):
of the math again, there's other nations that are doing this,
the UAE, United Aram Rights, Dubai, Abu Dhabi, et cetera, Bahamas, Cayman's, Monaco, Qatar.
We could go on now. I was recently in Dubai
and Abu Dhabi. I was speaking at the big Bitcoin
conference that was going on over there, and I went
and I visited Dubai and I put up a tweet
on my Twitter account, which, by the way, if you're
(09:06):
not following me, check it out. I put more play
by a play on there and I said something just
like I said, Hey, coming from California, which is the
highest tax state in the nation of the United States,
a small business owner, are you buried in all types
of work keeping you from the real thing that makes
you money. Well, that's where Just Works comes in. They're
the all in one platform that supports small business growth.
(09:28):
You can get all their tools that help with benefits
like payroll and HR and compliance with transparent pricing. Now
they help you hire top talent internationally, internew markets, quickly
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do I do it? Question? You can reach out to
their expert staff from sole proprietor or a team of twenty.
(09:50):
Just Works empowers all kinds of small businesses with real
human support. So visit justworks dot com slash podcast to
join the thousands of small businesses trust just Works to
take care of payroll, benefits, compliance and more. Again that's
just Works dot com slash Podcasts. It's pretty interesting coming
(10:10):
from the highest tax state and looking at Los Angeles
with probably the worst infrastructure. The roads are falling apart,
the buildings are falling apart. You have the biggest homeless
problem that's there, and there's not one single crane up
in the sky. You can tell a lot about the
economy of a city by how many cranes are there,
how much development's going on. And I said over in
Dubai there's no income tax, and yet the city is
(10:31):
probably the cleanest city that I've ever seen in my life.
The infrastructure is amazing. I'd call it magnificent. That's only
word I could think of, and there's cranes everywhere. There's
no tax. So I was just saying, it's interesting to
understand that, and I got blown up. I didn't know
you could say I couldn't say good things about Dubai.
And everyone said, well, that's because they use slaves, that's
(10:51):
because they've stolen all the oil from the land, all
these different things, and none of that's true. Well, maybe
they did use oil at one point, but today Dubai
has no income tax and they have almost no less
than one percent of their GDP comes from oil. So
where do nations like Dubai or Bahamas or came into Monica.
(11:13):
Where do they or how do they fund the government
without tax without income taxes? Well, there's always going to
be taxes. The government has to receive money, but it
doesn't have to come from income. There's a lot of
tax that we pay. So for example, in Dubai, there's
the five percent vat tax. Okay, So that's sort of
like in the United States, we have a sales tax,
and so that tax happens every time there's a transaction happening.
(11:36):
And then businesses also pay nine percent, so a nine
percent corporate tax rate, which of course, is way less
than the United States as well. So that's how sort
of things like that happen. Now we can see in Dubai.
The reason why I which twenty es Dubai is, like
I said, I was recently there, twenty six percent comes
from wholesale and retail trade, twelve percent from logistics. They
have a big tourism industry here, this is only five percent.
(11:59):
That's much now real estate manufacturing, and so all of
these sectors pay in money through that nine percent corporate rate.
But the thing to understand here is that why are
all those businesses there. What Dubai did is that, hey,
we're going to compete with the rest of the world
and we'll attract capital. So by being very pro business
and very pro capitalism, all these companies have been coming
(12:21):
this set up there, and then they benefit from taxing
those companies, albeit at a very much lower rate than
what the United States does. And so we've seen that
it's not just a dream, it's not just history. It's
actually happening right now. Now back to President Bukayley's comments
about your taxes or American's taxes not really funding their government.
(12:42):
This is a chart from the government from the Congressional
Budget Office. And what this is showing is the deficit,
and the deficit is obviously the difference between what the
government's spending and what they're bringing in from taxes. And again,
income taxes is part of the taxes. There's all kinds
of other taxes, right, so business taxes and property taxes
and sales taxes and capital gains taxes, on and on. However,
(13:05):
the problem is that the government continues to spend more
and more and more and more and more than they collect.
We're spending about two trillion more than what they're bringing in,
and per the government's CBO, they project that gap, that
deficit gap to get bigger and bigger and bigger. So
two trillion more than they're spending, two trillion more than
they bring in, and then it will be two and
(13:26):
a half and then three and then four. And so
if they're spending an extra two trillion dollars, again back
to Bekayley's comment, what do they need our money for?
Where are they getting that money? And they show you, well,
it's debt. So this is the line of where we're
at today and this is what they project the debt
levels to go up to, And I just want to
bring out one point. I wrote a book called The
(13:48):
Uncommunist Manifesto, the best selling book on Amazon. I'll link
to it down below. You should check it out, The
Uncommunist Manifesto. But in Karl Marx's book, Marxist book called
the Communist Manifesto, he laid out ten points of communism.
And I'll just let you know that right here. Number
two a heavy progressive or graduated income tax. It's a
(14:10):
Marxist idea. I'd also let you know number five is
a central bank. So it wouldn't be a big surprise
that both the IRS, the taxation system, and the central bank,
the FED, we're both created at the same time in
nineteen thirteen. Both of them are Marxist ideas. So back
to Bukaya's comment, why does the government take your money?
You think you're funding the government, but you're not, So
(14:31):
then why are we paying such heavy income taxes? It's Marxism,
it's redistribution. That's a whole nother comment, a whole nother conversation.
If you want me to do a video on that,
let me know down in the comments down below. Otherwise,
go chack. Got that book. But let's talk about the
pros and cons of this, and then we'll talk about
could this really happen? And what I think is going
to happen? All right, so potential shock. So what a
(14:51):
lot of people are saying is obviously the pro would be, well, shoot,
if we got more revenue from trade, that's good for
the government. So there's more money coming in. All the
businesses and companies and countries that are sending stuff into
the US, they pay a little bit. The US has
more money. That's great. That might mean also less taxes
for citizens. I would love it if my income tax
(15:13):
were to go down or obviously completely go away altogether.
That'd be amazing. So pro more income for the government.
Pro more income for me. I could keep more of
my income. Now, it's important to understand Howser's law. I
talk about this quite often. And the interesting thing about
Houser's law is there's only so much money to go around.
There's only a pie. Now the pie could get bigger
(15:34):
or smaller, but we have to divide up that pie.
And so basically the way it works is kind of
common sense. If you were to keep one hundred percent
of your money, you would have more money to spend
and invest. If you keep zero of your money, if
they took all of it, you would have no money
to spend an invest. So everything else is just a spectrum.
You have to understand. The government cannot spend something it
(15:56):
has not taken from you. It just reaches. Now it
can take money, as in debt from the future. It
could do that. But Perhauser's law, it shows that regardless
of what the tax rate is ten percent or ninety percent,
the percentage of the pie of GDP stays about the same,
about nineteen percent. So when taxes go down, the pie
(16:19):
gets bigger. When taxes go up, the pie gets smaller,
but the percentage of revenue to the pie of GDP
stays about the same. All right, So that's Houser's lot.
But back to the potential shock. So the pros sound good,
less taxes for me, more revenue for the government. The
cons could be well. Higher costs for imported goods, so
we import a lot of goods, and so we can
(16:41):
see the prices of all those things go up. That's inflation.
That means your money doesn't buy as much as it
used to. That could be bad, bad for you. We
could also see potentially retaliatory tariffs. So if the US
were to slap tariffs on other nations, then another nations say, okay, fine,
then we'll slap tariffs on your stuff. But here's the
thing about this, I think this part's overblown in my opinion,
(17:02):
and the reason why is that most other nations already
have tariffs. They have all types of duties, import duties,
and vat taxes. Like I've been sendenced a bunch of
stuff down to Mexico for my house that I built
down there, but I'm paying this enormous rate every single
time I shift something down there, So we're already having
that on top of that. The US is a net importer.
(17:23):
We don't export much stuff, but number one thing we
export is our own financial services, our Internet services. You
might already say there's tariffs on those the EU. I
think Zuckerberg was on Rogan recently, and I think he
said that the tech companies have been fined like thirty
billion dollars in just the last five or ten years.
That's sort of like a tariff. So we export financial services,
(17:44):
internet services, and energy. So really, I don't think this
is a big risk. All right, Now, let's think about
the probability of something like this going through in one
hundred percent or partially, and what that means for us. So,
first of all, as you might imagine, they're going to
be massive hurdles in Congress, but not just Congress, Like
there's an entire irs you know, deep state operation. You
(18:07):
have all the attorneys that make money from tax attorneys
and all of that, that whole complex, if you will.
They're going to fight that. They don't want that to
go through. Obviously, they want to keep that in place.
The Marxist organization wants to stay there. Now, what's the
probability of it actually replacing the income tax? Well, if
you think that the income tax is still needed by
the government, then what's the probability of that. Let's look
(18:30):
at some of the let's look at some of the math. Now,
as I said, right, Trump pledged to do that. He's
also pledged to do a bunch of other things with taxes. So,
for example, he's vowed on the campaign tilt to up
in the tax structure by no taxes on tips, so
get rid of that. That's pretty good. Overtime, no tax
on overtime, no tax on social security. So a lot
of things like that, even floating the elimination of the
(18:52):
federal income tax altogether, which is this this Although, like
I said, there's going to be a lot of pushback. Now,
I do want to just point out again, and this
is Trump's second term. So in his first term, he
did a ton of tax reform. As a matter of fact,
President Trump achieved the biggest tax cuts and reforms in
American history, many of which I'm still loving and using today.
(19:13):
But they're dwindling down, like, for example, accelerated depreciation, bonus depreciation.
It's a big one. And so I just want to
point out in his first term he did enormous tax cuts.
And so you know he's a man of his order.
He said he's gonna do some of this stuff. I
would expect a lot of this to go through. At
what level, Well, let's look at some of the probability
of this. Let's look at some of the numbers. So
(19:34):
we can see here that if we were going to
put a twenty percent tariff on all imported goods, what
dent would that put into the income tax that he
wants to get rid of. Well, we can see total
imports last year twenty twenty four were three point eight
trillion dollars right now, the federal revenue. The federal government's
total revenue for the same year was five trillion dollars.
(19:58):
So if we were to take twenty percent of the
total imports three point eight trillion, that is about seven
hundred and sixty six billion dollars. That's the twenty percent
across the board. Now, if we do the math, that's
only about fifteen point six percent of the government's total revenue.
So it doesn't really make up for the whole thing.
That's assuming that they need that money from us and
(20:20):
they're just not going to spin it off now. I
also like to point out the betting markets. I look
at them regularly. Now. Currently there's not a betting market
opened for this. Specifically, if we'll have tariffs replace income taxes,
I'd love to see someone spin that up. But currently
we do have three different proposals that we're betting on
in regards to Trump and tax policies. So, will Trump
(20:42):
end taxes on tips as he sort of said he
would right now, the betting markets say there's a thirty
three percent chance of that going through. Will Trump cut
corporate taxes in twenty twenty five there's a sixty percent
chance of that going through. And will Trump cut taxes
on high earners in twenty twenty five, then there's a
twenty one chance. So corporate taxes sixty percent better than average.
(21:04):
The rest are below average on that point. So that's
what the sort of probabilities are of this going through.
Now what does this mean for us either way? Well,
a couple things. It means Number one, pretty much expect
higher prices, all right, So there's gonna be some tariffs.
Maybe they're not going to be across the board like
he said, maybe they won't be as high, but he's
going to increase them. We know that because he did before,
(21:25):
and he's gonna at least follow through some of that.
So that's going to be higher prices no matter what,
even if there's not this retaliatory you know, potential retaliatory
risk that people see, it's going to mean higher prices.
Expect for that. It's also going to mean lower taxes.
So we're gonna have some tariffs. It's going to bring
prices up. We're also going to have tax cuts, so
(21:47):
will bring taxes down. Now we don't know if it's
going to be one hundred percent but there's going to
be some blend of that, so be prepared for that.
I do want to just let you know one other
thing though, that regardless of what happens, we all have
the ability to bring down the amount of taxes that
we pay by using all types of incentives that the
government puts in place. So the tax code is complex
(22:09):
and it favors investors not consumers. So if you're just
a W two earner that just watches TV and sets
in your mom's basement, you don't get a lot of
breaks or incentives from the government. But if you buy
a house, or you build a business or things like that,
then you do get a lot of incentives to lower
your taxes this way. So if you want to learn
more about that, I have a whole video right here
(22:31):
that you can go watch on that. Otherwise, let me
know what you think. Do you think this goes through?
Leave it in the comments down below, and that's what
I got. All right, to your success. I'm out
Host
Mark Moss
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