Sponsors (15)
Introduced January 3, 2025 by Buddy Carter · Last progress January 3, 2025
The bill trades a simpler, lower direct‑tax landscape and increased take‑home pay for many Americans against a regressive consumption tax structure, major fiscal risks to federal programs (especially Social Security/Medicare), and large administrative and transition costs that disproportionately burden low‑income households, small businesses, and public administration.
Most taxpayers — including wage earners, self-employed people, and heirs — would no longer owe federal income, self-employment, estate, or gift taxes beginning 2027, increasing take‑home pay and allowing larger post‑tax inheritances.
Many taxpayers, employers, and some federal administrators would face simpler filing and collection procedures because the bill consolidates and modernizes procedural rules, harmonizes collections with state systems, and creates new Treasury bureaus to administer sales/excise functions.
Taxpayers could gain stronger privacy from elimination of detailed income reporting and withholding requirements under a consumption‑based system, reducing the amount of personal income data the federal government collects.
Low‑income households would disproportionately bear a higher tax burden because a national sales tax is regressive, increasing the share of income spent on taxes for poorer families.
Social Security and Medicare financing and benefit accuracy are at risk: payroll‑tax funding would shift to general revenues, IRS‑to‑SSA data transfers would be banned, and record‑destruction rules could degrade earnings records, threatening program stability and accurate benefits for retirees.
Eliminating federal income and payroll taxes removes a major revenue source, making large federal deficits, deep spending cuts, or replacement taxes likely, which would affect services and the overall fiscal position.
Based on analysis of 10 sections of legislative text.
Repeals income, payroll, estate, and gift taxes; establishes a federal national sales tax; reorganizes Treasury tax bureaus; and alters Social Security funding and COLA indexing.
Creates a broad federal national sales tax on final consumption, repeals the federal income, payroll, estate, and gift taxes, reorganizes Treasury tax administration, and changes how Social Security is funded and indexed. Sets most changes to take effect January 1, 2027, includes deadlines for recordkeeping and administrative changes through 2029, and contains a seven-year conditional sunset if the Sixteenth Amendment is not repealed.