The Fair Tax Act suggests the abolition of the IRS and the replacement of the US tax code with a national consumption tax.
In an effort to replace the present US tax code with a national consumption tax, Rep. Earl “Buddy” Carter has introduced a bill known as H.R. 25, the Fair Tax Act, which would eliminate the Internal Revenue Service (IRS).
The legislation, which was unveiled on January 9, would establish a single national consumption tax system and eliminate all personal and corporate income taxes, death tax, gift taxes, and payroll tax.
The Fair Tax’s proposal to abolish the IRS is one of its most notable features, as it simplifies tax administration and conformance for both individuals and enterprises.
“The Fair Tax is precisely that—fair. Rep. Carter declared that it is the sole tax proposal that is pro-growth, straightforward, and enables Americans to retain every penny of their hard-earned money, all while eliminating the necessity for the IRS.
Several Republican representatives, such as Andrew Clyde, John Carter, Scott Perry, and Eric Burlison, have expressed their support for the initiative.
In his endorsement of the proposal, Representative Barry Loudermilk stated, “Hard-working Americans should not require a team of attorneys or accountants to complete their taxes; rather, they require a straightforward system that fosters innovation and development.”
Rep. Clyde stated, “This legislation offers a pragmatic solution to the problems of the weaponized IRS, simplifies our tax code, and promotes economic prosperity.”
Former Georgia Congressman John Linder initially introduced the Fair Tax Act to Congress in 1999. This legislation would mandate that unauthorized immigrants pay taxes while simultaneously denying them the consumption allowance that is granted to legal US residents.
The IRS published final regulations last month that mandate intermediaries to report transactions until 2027. Under the regulations, brokers are required to submit aggregate proceeds and taxpayer information to the agency in order to guarantee transparency in transactions.
The classification of brokers now includes platforms that facilitate digital asset transactions, potentially through smart contracts. The objective of this classification is to improve taxpayer conformance and is applicable to an estimated 650 to 875 DeFi brokers.
The crypto industry groups have expressed apprehension regarding the scope of broker definitions in response to the IRS’s new reporting rules.
The Blockchain Association, DeFi Education Fund, and Texas Blockchain Council have filed a lawsuit against the IRS in order to contest these regulations.
Critics, including industry leaders, contend that the regulations violate privacy, present significant operational challenges, and have the potential to relocate the rapidly expanding DeFi sector abroad. They argue that DeFi should be exempt from such reporting requirements due to its decentralized nature, which is characterized by the absence of broker-like intermediaries.
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