LIFE WITHOUT THE FEDERAL INCOME TAX
President Trump has repeatedly advocated for the elimination of the federal income tax. While many Washington spokespersons ignore the benefits of such a move—focusing instead on why "it cannot be done"—this report highlights the immediate advantages for our businesses, citizens, and economy once the income tax is abolished. Once the public demands an end to the income tax and the intrusive filing process, we can implement superior alternative funding methods.
Repealing the federal income tax would be the most significant shift in the American social contract since the ratification of the 16th Amendment in 1913.
The purpose of this Chairman’s Report is to draw attention to the benefits to our businesses, our citizens and to our economy that will immediately flow once the income tax is eliminated.
When the people demand elimination of the income tax and the filing of tax returns, then we can work out the best alternative ways to fund the government.
Impact on Individuals, Business Operations and Corporate Strategy
The Tax Foundation calculated the costs of the income tax. Here is what they found:- In 2024, Americans filed 266.6 million tax returns. Of these, over 65 percent, or 174.4 million, were individual and corporate income tax returns, while another 33.6 million were employment tax returns.
- According to the latest estimates from the White House Office of Information and Regulatory Affairs (OIRA), Americans will spend almost 7.1 billion hours complying with IRS tax filing and reporting requirements in 2025.
- This is equal to 3.4 million full-time workers—almost the population of Los Angeles and nearly 38 times the workforce the IRS employed in FY 2024—doing nothing but tax return paperwork for a full year.
- If we assume a reasonable hourly wage, the 7.1 billion hours Americans spend complying with the tax code costs the economy roughly $388 billion in lost productivity.
- In addition, the IRS estimates that Americans spend roughly $148 billion annually in out-of-pocket costs to comply with the tax code.
- This brings total compliance costs to $536 billion, or nearly 1.8 percent of GDP.
Individuals Keep 100% of Their Paycheck and No Longer File Returns
Today, employees get their after-tax paycheck which may reduce the amount they earned by 20% to 30%. With no income tax, employees get their full paycheck.
Reconfiguration of Investment and Capital Structure
Current tax law creates a systemic bias toward debt financing because interest payments are deductible while dividends are not. Repeal would equalize the treatment of equity and debt, encouraging firms to retain earnings for internal investment.Projections suggest that removing the tax on capital income could expand the long-run capital stock by 3.4% to 4.8%, boosting labor productivity and raising wages.
| Business Variable | Estimated Impact of Repeal | Economic Consequence |
| Compliance Costs | -$536 Billion/year | Reallocation of 1.8% of GDP to production |
| Capital Stock | +3.4% to +4.8% | Increased labor productivity and output |
| R&D Incentives | Removal of 15%-21% tax shield | Shift toward market-driven innovation |
| Debt Usage | Reduced bias toward leverage | Stronger, equity-based corporate balance sheets |
Elimination of Income Tax-Based Social Incentives
The D.C. Elites don’t believe that the rest of us will do things that the Elites believe are right unless they “encourage” us.The federal government currently uses the income tax code to subsidize specific behaviors that they believe are “good” for the rest of us through income tax deductions.
Many people forget these things about an income tax deduction:
- To benefit from deductions, one must itemize—something only 10% of present income tax filers do.
- The value of a deduction varies by taxpayer. The higher the income the more the benefit of a deduction.
- To see the value of a deduction to you, calculate the effective tax rate percentage (the percentage determined by dividing the amount of income taxes you pay by your total income).
- For example, if your effective tax rate percentage is 20% and you have a $10,000 deduction, your tax savings is $2,000. This means that if you did not take the deduction, you would have paid $2,000 in taxes and had $8,000 left. It cost you $8,000 to take the deduction.
- It is only available to the 10% of taxpayers who itemize their deductions.
- According to the Tax Policy Center, about 75% of the total tax savings from this deduction goes to households earning over $200,000 per year.
- Studies suggest the removal of the home mortgage deduction would have little effect on homeownership rates.
- Studies by the National Association of Realtors say that it could lead to an 8% to 28% drop in housing prices.
- This means that without the home mortgage deduction the price of homes will reduce between 8% and 28%.
- 90% of us are paying between 8% and 28% more than we would be paying if the home mortgage deduction was eliminated.
No longer will lobbyists funnel millions of dollars to Members of Congress in return for their support of tax benefits to the lobbyists’ clients.
Retirement and Savings Behavior
There will be no need for complicated IRA’s or 401k’s. 100% of the money earned from work, savings or investment will belong to you.
If employers want to contribute to a retirement account for employees, they can do so and limit the withdrawal until a certain age. However, the account will not require actuaries and tax accountants but simply be a contract between the company and the employees.
Import-Export Fairness
Without the income tax, U.S. exporters will be more competitive because their prices will no longer contain the 10% to 20% cost of the income tax.
U.S. businesses will be able to lower their prices, and still make the same profit, by the 10% to 20% the prices were increased by the cost of the income tax.
Foreign Investment
Without the income tax, investors from around the world will compete to invest in the U.S. This will allow our companies to invest in equipment and technology that will enable them to become more productive. Increases in productivity lead to increases in wages.
CONCLUSION
The few people who favor keeping the income tax are almost always people who either earn large amounts working on the income tax or those who have structured their lives to not have taxable income.
While there can be legitimate debates on the best alternative to the income tax, it is time to make the Members of Congress explain why they don’t want the rest of us to enjoy the benefits of the elimination of the income tax.
THE FAIRTAX IS THE ANSWER.
The FAIRtax is a national retail sales tax on new retail goods and retail services which provides a family credit so that all purchases up to the poverty level for each family are not taxed. There is no withholding from your paycheck, and YOU NEVER HAVE TO FILE A TAX RETURN TELLING THE GOVERNMENT HOW MUCH YOU EARNED AND HOW MUCH YOU SPENT, AND YOU’LL NEVER BE HARASSED BY THE IRS EVER AGAIN.
Many of you have labored tirelessly for freedom from the federal income tax and the IRS. You deserve a great deal of credit for your efforts to educate the American people on the need to fund the American government in a way that is good for America and returns freedom to the American people.
It is imperative, though, that we don’t replace the current income tax and the IRS with an alternative system that can still be manipulated by the Ruling Elite. We must let Congress and the President know that the best way to replace the income tax and the IRS is with the FAIRtax.
Make no mistake about it. The FAIRtax is a grave threat to the Ruling Elites. It will strip them of their power and their ability to control us though the tax system. Their opposition to the FAIRtax will be fierce and unrelenting. And don’t think for an instant that they won’t use half-truths, deception and downright lies in their desperate attempt to hang on to their power.
However, with the support of this President, we can finally eliminate the income tax and the IRS!!!
Of course, the best course of action is to not only repeal the income tax and abolish the IRS but to repeal the 16th Amendment as well so no future administration can ever shackle the American people with an income tax again.
We must come together and ensure that real tax reform, the FAIRtax, is not subverted by the Elites in D.C.
This will take the diligent efforts of all of us. We need your financial assistance, and we need your grass roots assistance.
If you have contacts that will allow us to get more information to President Trump about the FAIRtax please let us know.
Please email us at info@fairtax.org and we will give you some options on how you can best help us.
At a minimum, please call your Congressional representative and ask if he or she supports the FAIRtax. If so, thank him/her for their support and suggest they become a cosponsor of HR-25 if they’re not one already. If not, ask why not. If your representative claims to be unfamiliar with the FAIRtax, offer to have someone come to their office and explain it to them.
Please go to this link to invest in AFFT and help us pass the FAIRtax. It’s an investment in your and your family’s future.
THE SOLUTION—PASS THE FAIRTAX!
Why would D.C. pass the FAIRtax and give up this almost unlimited source of donations? The only way that they will is if the rest of us demand it!
Isn’t it time to end this ludicrous tax collection system and the IRS?
HELP BRING ABOUT REAL TAX REFORM AND STOP FUTURE IRS ABUSES
By contributing (investing) $10.40 per month, you help provide a financial base to AFFT. If you can make larger contributions (investments), these will be used not for salaries, as we are all volunteers, but for the needed updates to our economic studies which will be vital for all future years.
Please go to this link to invest in AFFT and help us pass the FAIRtax. It’s an investment in your and your family’s future.