Buddy Carter’s Fair Tax Act aims to supplant federal income and payroll taxes with a 23% national consumption tax and abolish the IRS.
Filed as H.R. 25, the proposal would eliminate the federal tax code, abolish the IRS, and implement a 23% consumption tax on new products and services.
The proposal would eliminate personal and corporate income taxes, payroll taxes, estate taxes, and gift taxes. In the transition to a consumption-based system, Americans would be able to take their entire paycheck home without any federal withholding, thereby restoring personal economic freedom. Advocates assert that it would streamline tax administration and limit government excess.
Former Georgia Congressman John Linder introduced the Fair Tax Act to Congress for the first time in 1999. It has garnered the backing of Republican legislators such as Andrew Clyde, John Carter, Scott Perry, and Eric Burlison. The measure also includes provisions that would mandate that unauthorized immigrants pay taxes, despite the fact that they would not be granted the same consumption allowance as legal U.S. residents.
The IRS implemented a regulation in September that mandates digital asset brokers to report their customers’ transactions beginning in 2027. Brokers are required to submit the aggregate proceeds, as well as taxpayer-identifying information, in accordance with the regulations. For the purposes of these regulations, intermediaries are defined as platforms that utilize smart contracts to facilitate transactions. Approximately 650 to 875 DeFi protocols are likely to be broker entities under those regulations, according to its count.
The recent classification has caused a stir among blockchain advocates. The Blockchain Association, DeFi Education Fund, and Texas Blockchain Council filed a lawsuit against the IRS, contending that the reporting requirements are excessively burdensome.
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