On January 9, 2025, Congressman Earl Carter proposed replacing the U.S. tax code with a national consumption tax and abolishing the IRS.
New tax system
The H.R. 25 bill, or The Fair Tax Act of 2025, was introduced by Rep. Earl 'Buddy' Carter. The bill challenges the existing U.S. tax code and aims to promote freedom, fairness, and economic opportunities. It calls for repealing income, payroll, estate, and gift taxes, proposing instead the implementation of a sales tax.
IRS abolition
One of the most radical changes proposed in the Fair Tax Act is the abolition of the IRS. The move aims to eliminate bureaucratic burdens on taxpayers. According to Carter, the simplified tax system makes IRS services unnecessary. The bill is backed by several Republicans, including Barry Loudermilk and Eric Burlison.
IRS vs the crypto community
The IRS was sued over the new reporting rules introduced upon the service on December 28, 2024. The complaint was filed by several organizations, including the Blockchain Association. The new rules require DeFi platforms to provide transaction info by 2027. Plaintiffs find these rules unconstitutional and detrimental to America’s leadership in the crypto industry.
The proposal of the Fair Tax Act 2025 is sparking considerable debate. While it's unclear if it will be adopted, the potential abolition of the IRS could dramatically change U.S. tax dynamics.
