Important takeaways
- The Fair Tax Act proposes to replace the US tax code with a national consumption tax and to abolish the IRS.
- The law is supported by several Republicans and contains provisions that affect immigrant taxation.
Rep. Earl “Buddy” Carter has proposed eliminating the Internal Revenue Service (IRS) and replacing the current US tax code with a national consumption tax through a bill known as HR 25, the Fair Tax Act.
the legislation, uncovered on January 9, would abolish all personal and corporate income taxes, death taxes, gift taxes and payroll taxes, while implementing a single national consumption tax system.
One of the most notable aspects of Fair Tax is its proposal to eliminate the IRS, thereby simplifying tax administration and compliance for individuals and businesses.
“The Fair Tax is just that – fair. It is the only tax proposal out there that is pro-growth, simple and allows Americans to keep every cent of their hard-earned money, while eliminating the need for the IRS altogether, said Rep. Carter.
The bill has received support from several Republican representatives, including Andrew Clyde, John Carter, Scott Perry and Eric Burlison, among others.
Rope. Barry Loudermilk endorsed the proposal, stating:
“Hard-working Americans shouldn’t need a team of lawyers or accountants to fill out their taxes — they need a simple system that encourages growth and innovation.”
“This legislation provides a common sense solution to eliminate the need for the armed IRS, simplify our tax code and promote economic prosperity,” said Rep. Clyde.
The Fair Tax Act, first introduced to Congress in 1999 by former Congressman John Linder of Georgia, would also require unauthorized immigrants to pay taxes while denying the consumer allowance to legal US residents.
Blockchain Association and DeFi groups are suing the IRS over new reporting rules
Last month, the IRS is published final rules requiring brokers to report transactions through 2027. Under the rules, which aim to ensure transparency in transactions, brokers must report gross receipts and taxpayer information to the agency.
Platforms that facilitate digital asset transactions, possibly through smart contracts, are now classified as brokers. This classification aims to improve taxpayer compliance and applies to an estimated 650 to 875 DeFi brokers.
The IRS’s new reporting rules have raised concerns among crypto industry groups about the scope of broker definitions.
The Blockchain Association, the DeFi Education Fund, and the Texas Blockchain Council have filed a lawsuit against the IRS to challenge these rules.
Critics, including industry leaders, argue that the rules violate privacy, pose major operational challenges and could drive the growing DeFi sector overseas. They argue that DeFi’s decentralized nature, lacking broker-like intermediaries, should exempt it from such reporting requirements.
