Key Takeaways
The Fair Tax Act, proposed by Rep. Earl “Buddy” Carter, aims to replace the US tax code with a national consumption tax and abolish the IRS. The bill, known as H.R. 25, would eliminate personal and corporate income taxes, death tax, gift taxes, and payroll tax, while implementing a single national consumption tax system. One of the notable features of the Fair Tax is its proposal to eliminate the IRS, simplifying tax administration and compliance for individuals and businesses.
Several Republican representatives, including Andrew Clyde, John Carter, Scott Perry, and Eric Burlison, have expressed support for the Fair Tax Act. Rep. Barry Loudermilk endorsed the proposal, emphasizing the need for a simple tax system that promotes growth and innovation.
Introduced to Congress in 1999, the Fair Tax Act would also require unauthorized immigrants to pay taxes without granting them the consumption allowance provided to legal US residents.
In a separate development, the IRS recently published regulations that require brokers to report transactions from 2027. The rules aim to ensure transparency and require brokers to report gross proceeds and taxpayer information to the agency. Platforms facilitating digital asset transactions, including those involving smart contracts, are now classified as brokers. This classification, which applies to an estimated 650 to 875 DeFi brokers, is intended to enhance taxpayer compliance.
The IRS’s new reporting rules have sparked concerns among crypto industry groups, leading the Blockchain Association, DeFi Education Fund, and Texas Blockchain Council to file a lawsuit challenging these rules. Critics argue that the rules infringe on privacy, present operational challenges, and may drive the DeFi sector overseas. They contend that the decentralized nature of DeFi, which lacks broker-like intermediaries, should exempt it from such reporting requirements.
