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house Bill H.R. 25

How Much Do You Like The IRS?

Argument in favor

Killing the IRS and federal taxes, and replacing them with a national sales tax would drastically cut down on tax evasion, incentivize businesses to come to the U.S., and clearly demonstrate the cost of funding the federal government to citizens.

EricRevell's Opinion
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02/23/2015
I'm not completely sold on the FairTax as being a better alternative than a flat tax, but either option would be preferable to the current system as long as the rate is sufficiently low.
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Cary's Opinion
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10/16/2015
Imagine a world without the IRS! I think a 23% sales tax is totally worth it. Plus I get to decide how much I pay based on how much I spend.
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BTSundra's Opinion
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03/31/2016
I'd prefer a flat tax, but anything's better than the IRS.
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Argument opposed

This tax is too regressive — it would shrink the taxes that the wealthiest pay while increasing the net taxes on the lower and middle classes. The rebates for those in poverty may not be enough, and the real tax rate may be more than the 23% proponents claim.

LibertyForAll's Opinion
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01/02/2016
Those of you that vote against such a plan are just as greedy as the 1% you demonize. A Flat Tax is much more favorable and fluent plan for generations to come. The federal government never had the IRS or income tax until 1913.
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bart's Opinion
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02/12/2015
This is a fascinating bill that would replace the current national tax system with a national sales tax. I like the simplicity of it but would need to be sold on this being the best option.
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hrieniets's Opinion
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02/26/2016
The tax proposed isn't large enough to keep the deficit from raising. Not to mention this would raise the tax the middle class would pay and lower the tax the rich pay.
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What is House Bill H.R. 25?

This bill would eliminate all federal income taxes, federal payroll taxes, estate taxes, and gift taxes before 2017. In their place, H.R. 22 would instate a national sales tax rate of 23% on all purchases of goods and services. 


The Internal Revenue Service (IRS) would be abolished, and the Treasury Department and SSA would assume the duties previously assigned to the IRS. Under this bill states would have the primary authority over the collection of sales tax revenues. 


The bill affords a monthly sales tax rebate for people and families with incomes at or below the poverty level. This rebate would be mailed to the taxpayer receiving it, or deposited via direct deposit or electronic card. People looking to receive this rebate would go through a registration process administered by the Treasury Department and Social Security Administration (SSA).

Also, 23 percent is not a fixed rate. That number would be automatically adjusted every year based on federal receipts in the previous fiscal year.

Impact

Taxpayers, all people who purchase goods and services in the United States, the Social Security Administration, and the Internal Revenue Service.

Cost of House Bill H.R. 25

A CBO cost estimate is unavailable.

More Information

In-Depth:

The FairTax has been introduced to Congress multiple times since its debut in 1999. It has been met with criticism from proponents of the U.S.'s current progressive tax system, and those who support a flat tax.


In 2007, Factcheck.org conducted an analysis of FairTax bill and found that it would raise the general number of federal taxes paid by people making between $30,000 and $200,000. Meanwhile, the FairTax would reduce the share of federal taxes paid by those making less than $30,000 and more than $200,000. This study concluded that the tax rate needed to make this proposal revenue-neutral — basically meaning that won't increase the deficit — would be 31.2 percent. Yup, significantly more than the stated 23%.


The rebate system proposed by the FairTax would function by calculating the amount spent by poverty level households every month, and sending the qualifying households a check or electronic deposit for that amount each month. Based on 2014 numbers, that amount would be $1,983. In practice, this rebate would actually be a “prebate” since the money would be available to the individual or family before making purchases, so they aren’t negatively impacted by the increased sales tax when they shop for necessities.


This current iteration of the FairTax has received a record level of support in Congress. This is perhaps due to the growing disillusionment with the IRS following the scandal that revealed the agency was targeting conservatives based on their political views.


Media:

Sponsoring Rep. Rob Woodall (R-GA) Press Release

The Hill

Factcheck.org

Investopedia

Forbes (Opposed)

(Photo Credit: LegalInsurrection.com)

AKA

FairTax Act of 2015

Official Title

To promote freedom, fairness, and economic opportunity by repealing the income tax and other taxes, abolishing the Internal Revenue Service, and enacting a national sales tax to be administered primarily by the States.

bill Progress


  • Not enacted
    The President has not signed this bill
  • The senate has not voted
  • The house has not voted
      house Committees
      Committee on Ways and Means
    IntroducedJanuary 6th, 2015
    I'm not completely sold on the FairTax as being a better alternative than a flat tax, but either option would be preferable to the current system as long as the rate is sufficiently low.
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    Those of you that vote against such a plan are just as greedy as the 1% you demonize. A Flat Tax is much more favorable and fluent plan for generations to come. The federal government never had the IRS or income tax until 1913.
    Like (10)
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    This is a fascinating bill that would replace the current national tax system with a national sales tax. I like the simplicity of it but would need to be sold on this being the best option.
    Like (8)
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    Imagine a world without the IRS! I think a 23% sales tax is totally worth it. Plus I get to decide how much I pay based on how much I spend.
    Like (5)
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    The tax proposed isn't large enough to keep the deficit from raising. Not to mention this would raise the tax the middle class would pay and lower the tax the rich pay.
    Like (4)
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    I'd prefer a flat tax, but anything's better than the IRS.
    Like (4)
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    I love the idea of foreign tourists helping out with our tax burden. They use our roads and such while they are here, not to mention this is the fairest tax system I can think of.
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    Forces everyone to pay their share. Instead of 45% paying no taxes at all
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    We need the progressive income tax and the wealthy, big business, and Wall Street must pay much more.
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    This is a totally regressive tax that will greatly benefit the rich and put an undue burden on those least able to afford it. Imagine paying an extra $1.25 for a gallon of milk!
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    Businesses would flock here if we implemented the fair tax. It would create millions of jobs, increase government revenue and it would be a big win for the middle and lower class.
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    Yes, everything should be free, idiots. Show me a single successful, developed society on the planet where there is no communal collection of funds for the benefit of the greater group. Doesn't exist. So if you don't want to pay taxes, get the hell off of my roads and get your kids out of the schools I paid for, and get your dumb ass sovereign citizen a cabin in the Yukon (oh wait, Canada has taxes too)
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    The IRS is an inefficient, corrupt bureaucracy that needs to be overhauled and a simplified tax code instituted . A sales tax of any kind is regressive and penalizes those least able to pay. A tax that is across the board the same percentage (10%) is the fairest. Eliminate the myriad loopholes and deductions and everyone is treated fairly.
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    If you make the legislation more like the FairTax it would take the regressiveness.
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    Vote yes on this and then let's have a national funeral for the middle class. This is another bill that only benefits the 1%.
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    This would cut down on a lot of tax evasion!
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    The IRS has grown to become too invasive an institution to continue. Removing it in favor of a national sales tax seems the ideal solution, provided the transition is slow enough to cause as minimal an impact to our citizens as possible.
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    Who would audit businesses that use evasive transactions to evade remitting the "flat tax". Why do other taxing authorities come to study the American tax system? Why don't people realize that Congress passes the tax law? When will people realize the IRS is one of the only profit centers of the government. When will people stop being sheep.
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    Federal workers are like any other workers! Please don't single them out
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    I am supportive of an IRS abolishment but this will not have the effects desired at the rates suggested. The wealthiest of us do not pay enough taxes and with loopholes currently pay almost none. A flat tax rate would be far preferable.
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