On January 9, 2025, Congressman Earl Carter proposed a bill that would replace the US tax code with a national consumption tax and eliminate the IRS. Earlier this month, the Blockchain Association filed a lawsuit against the IRS over the new reporting rule.
New tax system
H.R. Bill 25, or Fair Tax Act of 2025was introduced by Rep. Earl “Buddy” Carter (R-GA). The bill challenges current U.S. tax law and the status quo of tax policy and aims to advance freedom, justice, and economic opportunity. The Fair Tax Act calls for the elimination of income, payroll, estate, and gift taxes. Instead, the law proposes to enact a sales tax.
According to the bill, the current federal income tax retards the economic growth and international competitiveness of the United States, discourages small businesses and farms, and lowers Americans' standard of living, reducing savings and investment rates.
Furthermore, the bill notes the harm caused by current unnecessary administrative and compliance cost pressures on individual and corporate taxpayers. Privacy violations and lack of tax transparency are other issues associated with federal income tax. According to the Fair Tax Act, Social Security, Medicare payroll taxes, and self-employment taxes hinder employment rates.
The alternative proposed in the bill is to impose a broad national sales tax on goods and services purchased for final consumption. The law proposes to tax all consumption of goods and services in the United States at once, preventing double, multiple, and consecutive taxes.
According to the bill, it will facilitate saving and investment, improve the standard of living of Americans, help businesses, and undo all other evils associated with the actual tax system. The Fair Taxes Act also provides feedback on how the government can promote policy change.
Abolish the IRS
One of the most radical changes proposed in the Fair Tax Act is the abolition of the Internal Revenue Service. This step aims to eliminate the bureaucratic burdens borne by individual and corporate taxpayers. According to Carter, the tax system introduced into the legislation eliminates the need for the IRS. Taxes should be easy and transparent so that people do not need professional help to fill out their taxes.
The bill has the support of a number of Republican members of Congress, including Barry Loudermilk, Eric Burleson, John Carter, Scott Perry, John Rutherford, Warren Davidson, Andy Biggs, Dale Strong, Rich McCormick, Andy Harris, and Andrew Clyde.
The last male The law “provides a common-sense solution to eliminate the need to weaponize the IRS, simplify our tax code, and promote economic prosperity.”
Representative Strong adds that the proposed tax system will make illegal immigrants pay taxes fairly.
IRS vs. Crypto Community
The IRS is being sued over new reporting rules that the Service introduced on the day the rules were introduced, i.e. December 28, 2024. complaint It has been signed by several organizations, including the Blockchain Association, Texas Blockchain Council, and DeFi Education Fund.
New reporting rules pose a threat to the well-being of the DeFi sector because they redefine the concept of an intermediary. According to the new rules, DeFi platforms will be considered as intermediaries. They will have to submit transaction information and returns to the IRS until 2027. The complaint explains that DeFi platforms are not intermediaries, and that is what makes them unique and innovative. As peer-to-peer systems, they don't rely on brokers or any other intermediaries, so the new IRS rules shouldn't apply to them, but they do.
Plaintiffs find the rules unconstitutional and harmful to US development and leadership in the cryptocurrency industry. They point out that if the rules come into force, it could influence many of the industry's leading brands to find better jurisdictions instead of operating in America.
Given this, abolishing the IRS may be seen as a possibility to end service attacks on DeFi systems. However, it is not yet clear whether the Fair Tax Act of 2025 will be adopted. The history of this act begins in 1999. Will 2025 be a special year? We'll see.
Source link