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- A United States Representative Earl Carter has introduced the Fair Tax Act (H.R. 25), a bill that aims to eliminate the Internal Revenue Service (IRS) and replace the existing U.S. tax system.
- The proposed legislation aims to abolish corporate income taxes, gift taxes, death taxes, and payroll taxes, replacing them with a national consumption tax system.
On January 9, Representative Earl Carter introduced a bold new proposal to eliminate the Internal Revenue Service (IRS) and overhaul the U.S. tax system. Known as H.R. 25, or the Fair Tax Act, the legislation seeks to replace the current federal tax code with a simpler, more streamlined national consumption tax.
Under the Fair Tax Act, all personal and corporate income taxes, payroll taxes, death taxes, and gift taxes would be abolished. This would simplify tax compliance for individuals and businesses while eliminating the need for the IRS.
“The Fair Tax is truly fair. It’s the only tax proposal that promotes economic growth, simplifies the system, and allows Americans to keep every penny they earn all while making the IRS obsolete. I’m proud to lead this Georgia-originated legislation that puts the power over tax rates back into the hands of the American people, not bureaucrats.” Rep. Carter stated.
Several Republican representatives have co-sponsored the Fair Tax Act, including Andrew Clyde, John Carter, Scott Perry, Eric Burlison, Barry Loudermilk, and others. Rep. Barry Loudermilk argues that the current tax system is too complex and burdens hard-working Americans and that the Fair Tax Act would foster growth and innovation by removing the need for accountants and IRS agents.
The proposal, which was first introduced in 1999 by former Congressman John Linder, has gained significant traction in recent years. One of the bill’s most contentious aspects is its requirement for unauthorized immigrants to pay the consumption tax while denying them the consumption allowance available to legal U.S. residents.
Advocates for free-market principles and cryptocurrency enthusiasts have embraced the proposal, praising its effort to abolish the IRS and simplify the tax system. Social media platforms like X and Reddit have seen increased discussion of the bill, with supporters lauding its potential to reduce bureaucratic overreach. Meanwhile, critics argue that the proposed consumption tax could disproportionately burden lower-income individuals, who spend a higher percentage of their earnings on consumption.
Legal Challenge to IRS Regulations
The Fair Tax Act comes at a time when the IRS and Treasury are facing legal action over new rules for crypto brokers. Several blockchain trade groups, including the Blockchain Association, DeFi Education Fund, and the Texas Blockchain Council, have filed a lawsuit against the IRS in a U.S. District Court in Texas. The lawsuit argues that the new regulations, which are set to take effect in 2027, are unconstitutional and could harm the digital asset industry.
These IRS regulations, issued on December 27, require crypto brokers to report digital asset transactions and extend these reporting requirements to decentralized exchanges and other front-end platforms. Marisa Coppel, head of legal at the Blockchain Association, criticized the IRS for overstepping their authority by expanding the definition of “broker” to include providers of decentralized finance (DeFi) trading platforms. She argued that these platforms, which do not directly facilitate transactions, should not be held to the same reporting requirements as traditional brokers.
