Guess how that plays out insurance wise. Whatever liability coverage you think you have, forget it if you willfully disabled legally mandated safety features. Even if it’s a motor vehicle accident where the noise wouldn’t have realistically made a difference, even if the other party is at fault in practical terms, if they find out your car safety features were tampered with you could be on the hook without help of insurance.

Not true, young padawan. I personally hit a jaywalker one time and didn’t even get a traffic citation. She was crossing against the light, at night, in a pounding rain, and apparently hadn’t bothered to look. I wasn’t quite able to stop in time. Witnesses confirmed my story and contradicted hers (that she was in the crosswalk with the light in her favor). If somebody disables their own hearing it’s on them, but if they claimed not to hear you and your car was in fact not making any sound because you disabled it (in violation of federal law) it would be on you.

If I hit somebody that steps into the street then it’s my fault no matter what.

This is not at all true. If someone steps out in front of you with little or no time for you to react, they’re just as much at fault. It will be much easier to argue that you’re to blame, when you’ve intentionally disabled the saftey device that would have alerted them to your presence though.

Even if it was true however: Just because it would be your fault doesn’t mean you should increase the chances of it happening.

Besides, most people wear earbuds when walking around town.

This is entirely your own false perception. Many if not most people don’t wear headphones near traffic, or at least only wear one, so that they can still hear their suroundings.

Regardless; Some people choosing to blockout sounds is no excuse for you putting everyone else in danger.

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You should fix this, or you should be cited for willful public endangerment and the vehicle towed+impounded.