Grant Cardone Says US Should Eliminate IRS and Switch To a Flat Tax: What That Would Mean for Your Paycheck
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Josephine Nesbit
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Angela Corry
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It’s officially tax season, and entrepreneur, real estate investor and motivational speaker Grant Cardone has a bone to pick with the IRS.
In a January post on X, Cardone suggested getting rid of the IRS and instead using a flat tax rate.
“Trump & Treasury Secretary Bessent committed to eliminating income taxes, replacing them with a fair consumption tax,” he wrote. “There is no reason to tax the people & print money. Make politicians accountable by cutting off the supply.”
Is this possible? And what would this mean for the average American’s paycheck? Tax experts weigh in.
What Is a Consumption Tax?
In this situation, a consumption tax is a tax system that would replace income taxes with a flat national sales tax on goods and services.
“Yes, you would get more money on payday, but that six pack of beer you buy on the way home from work would now have a Federal tax added to it, that tank of gas you buy to fill up the car would now have a Federal tax added to it, and so on,” wrote tax attorney Adam Brewer of AB Tax Law in an email to GOBankingRates. “It’s form over function, but at the end of the day you are still paying taxes.”
Is it Possible?
While it may be possible to implement, Brewer claims it’s impractical and would likely result in a significant reduction in tax revenue and a potential economic shutdown.
“We are a consumer based economy. Many of our tax systems are designed to encourage spending (e.g., mortgage interest deductions, depreciation deductions for business). A flat tax encourages saving,” he explained.
Who Would Pay More Taxes?
“Low-income taxpayers would pay more,” Brewer wrote. “There is no doubt about that point.”
According to Brewer, low-income taxpayers generally spend every dollar they earn and then some in the form of credit cards. Every dollar they spend would be subject to a flat tax.
“That’s in contrast to our current system of income tax where low income taxpayers pay little or no income tax and often get refunds from the child tax credit and earned income tax credit,” he added.
High earners would pay less tax overall. Because high-income taxpayers can save more income each month, they would be able to save pre-tax dollars, Brewer explained.
How This Would Impact the Average American’s Paycheck
Tax is still tax. While Americans’ take-home pay may increase, many of the items they purchase with that money will be taxed.
“So yes, you’ll get more money on payday, but from there most purchases would have a flat tax added so you will effectively be paying more for everything,” Brewer noted.
Mark Luscombe, principal analyst for Wolters Kluwer’s Tax and Accounting Division North America, also pointed out that it might encourage higher income taxpayers to use their extra funds for investment and job creation.
On the other hand, it could remove certain tax benefits.
“A pure flat tax might also eliminate many of the special deductions and credits of the current system designed to promote families, home ownership, retirement savings, education, charitable contributions and health insurance,” Luscombe stated.
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