Congressman proposes IRS elimination

On January 9, 2025, congressman Earl Carter proposed a bill that would replace the U.S. tax code with a national excise tax and abolish the IRS. Earlier this month, the IRS was sued by the Blockchain Association over its new reporting rule.

new tax system

The bill, H.R. 25, or the Fair Tax Act of 2025, was introduced by Representative Earl “Buddy” Carter (R–GA). The bill challenges current U.S. tax law and the taxation policy status quo and aims to promote freedom, justice, and economic opportunity. The Fair Tax Act calls for the elimination of income, payroll, estate and gift taxes. Instead, the law proposes enacting a sales tax.

Fair Tax Law:

✅Removes the IRS
✅Repeals the Tax Law
✅Holds Americans responsible for their tax rates
✅Forcing illegal immigrants to pay taxes

and more – read here👇https://t.co/SjLO4RRaKR

— Buddy Carter (@RepBuddyCarter) January 10, 2025

According to the bill, the current Federal income tax retards U.S. economic growth and international competitiveness, discourages small businesses and farms, and lowers Americans’ standard of living, lowering savings and investment rates.

Moreover, the bill also points out the harm that the current unnecessary administrative and compliance cost pressure has on individual and corporate taxpayers. Privacy violations and lack of transparency in taxation are other problems with Federal income tax. Under the Fair Tax Act, Social Security, Medicare payroll taxes, and self-employment taxes hinder employment rates.

The alternative proposed in the bill is a broad-based 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, avoiding double, multiple and progressive taxation.

According to the bill, this will make savings and investments easier, improve Americans’ living standards, help businesses, and eliminate all other evils associated with the de facto tax system. Additionally, the Fair Tax Act provides notes on how the government should encourage change in policy.

repeal of IRS

One of the most radical changes proposed in the Fair Tax Act is the abolition of the Internal Revenue Service. The move is intended to relieve bureaucratic burdens on individual and commercial taxpayers. According to Carter, the tax system introduced in the legislation eliminates the need for an IRS. Taxes should be easy and transparent so that people do not need professional help when filling out their taxes.

The bill is supported by a number of Republican congressmen, including Barry Loudermilk, Eric Burlison, John Carter, Scott Perry, John Rutherford, Warren Davidson, Andy Biggs, Dale Strong, Rich McCormick, Andy Harris and Andrew Clyde.

Second, he stated that the law “provides a common-sense solution to eliminate the need for a weaponized IRS, simplify our tax code, and promote economic prosperity.”

Rep. Strong adds that the proposed taxation system would ensure that illegal immigrants pay taxes fairly.

IRS and crypto community

The IRS was sued over new reporting rules implemented by the service on December 28, 2024, the day the rules went into effect. The complaint was signed by several organizations, including the Blockchain Association, Texas Blockchain Council, and DeFi Education Fund.

The new reporting rules pose a threat to the prosperity of the DeFi industry as it redefines the concept of broker. According to the new rules, DeFi platforms will be considered brokers. They will be required to submit transaction information and income to the IRS by 2027. The complaint makes clear that DeFi platforms are not brokers and that is what makes them unique and innovative. As peer-to-peer systems, they don’t rely on brokers or other intermediaries, so the IRS’s new rules shouldn’t apply to them, but they do.

Plaintiffs say the rules are unconstitutional and detrimental to America’s development and leadership in the crypto industry. They note that if the rules come into force, it could impact many leading industry brands to find better jurisdictions instead of operating in America.

Considering this, the removal of the IRS can be seen as a possibility to put an end to the service’s attacks on DeFi ecosystems. However, it is not yet clear whether the 2025 Fair Tax Law will be adopted. The history of the law began in 1999. Will 2025 be a breakthrough year? We will see.