The Proposal · Repeal, Replace, Ratify
The Proposal
A constitutional replacement, drawn from a working American model.
Nine states already operate without an income tax. The federal case rests on translating what works.
In One Sentence
Repeal the Sixteenth Amendment through state conventions under Article V's second clause, and simultaneously enact a broad-based federal consumption tax at the point of sale — shifting federal revenue from personal extraction to transactional commerce, on the same constitutional footing the Framers used for excises from the founding forward.
01 What We Propose
01
Repeal.
Repeal the Sixteenth Amendment by constitutional amendment, using Article V's second clause — the state-convention path used once before, to end Prohibition in 1933.
02
Replace.
Enact a broad-based federal consumption tax at the point of sale. H.R. 25 (the FairTax Act) is the standing legislative vehicle, reintroduced every Congress since 1999.
03
Ratify.
Sequence matters. The replacement passes first and takes effect concurrently with repeal, so there is never a revenue gap. The public is not asked to trust a promise; they are asked to ratify a working system.
02 The American Model Already Exists
Nine states fund their governments today without any tax on wages. They do not “avoid taxation.” They shift where revenue comes from — from personal income to consumption, property, industry, and fees. This is the empirical answer to the question every federal proposal has to face: what replaces the revenue?
Tourism-Driven
Florida
Sales tax + tourism
Visitors subsidize residents. Sales tax carries the primary load; no wage or estate tax.
Growth Economy
Texas
Sales + franchise + property
Business margin tax on corporations; higher property taxes; sales tax as primary individual levy.
Sales-Led
Tennessee
Sales tax (among highest)
Phased out the Hall tax on interest & dividends in 2021; fully no-income-tax since.
Gaming & Tourism
Nevada
Sales + gaming
Gaming, lodging, and sales taxes cover what an income tax would. Non-residents pay heavily.
B&O Model
Washington
Sales + Business & Occupation
Gross-receipts tax on businesses plus a high sales tax. (A narrow capital-gains tax was added in 2021.)
Sales-Led
South Dakota
Sales + financial services
Broad sales-tax base and a targeted banking/financial charter regime.
Extraction
Wyoming
Mineral severance
Severance taxes on coal, oil, gas, and trona carry the general fund. Residents pay little directly.
Extraction
Alaska
Oil royalties + Permanent Fund
Oil revenue funds government and pays residents an annual dividend. Neither income nor statewide sales tax.
Property-Led
New Hampshire
Property + business
No wage income tax and no general sales tax. Revenue comes primarily from property and business profits taxes.
Not every model is replicable at the federal level — oil royalties and tourism revenue are state assets. The principle that translates is the shift from personal extraction to transactional commerce.
03 How States Fund Government Without an Income Tax
Primary
I
Sales & Consumption
The primary driver in most no-income-tax states. Tourism-heavy states (FL, NV) see non-residents subsidize residents.
Secondary
II
Property Taxes
Often higher than average. Local governments lean heavily on the property base. The principal tradeoff for no income tax.
Industry
III
Business & Extraction
Franchise taxes (TX), severance on minerals (WY, AK), gross-receipts regimes (WA). Taxes production, not personal income.
Tertiary
IV
Fees, Licenses, Sin Taxes
Tolls, permits, licensing, alcohol, gambling. Revenue is transactional and event-based rather than annual and personal.
04 For Organizers & Chapters
Economic Base
The base supports the model.
Resource wealth (AK, WY), tourism (FL, NV), or high growth (TX) provides a revenue floor that states without those assets cannot easily replicate. At the federal level, the base is the national consumer economy — which is larger and more stable.
Population & Capital Flow
People and businesses migrate.
No-income-tax states attract retirees, high earners, and employers, which grows the property base and consumption volume over time. The effect is self-reinforcing, but it presupposes a state that is competing — a federal analog requires a different framing.
Federal Transfers
States still receive federal dollars.
This is the piece that does not translate directly: the federal government cannot transfer to itself. The federal proposal must therefore carry its own base and cannot lean on an outside filler. This is why the replacement has to be broad and robust, not a patchwork.
05 Tradeoffs — Stated Honestly
No-income-tax states are not tax-free. They are tax-shifted, and the shifts have costs. A credible federal proposal has to name them.
Regressivity
Consumption taxes hit lower earners harder.
Sales tax as a share of income is higher at lower incomes because lower-income households spend a larger portion of their earnings. Federal mitigation: a monthly prebate paid to every household up to the poverty line, eliminating tax on basic necessities without means-testing. The H.R. 25 design addresses this directly.
Property Pressure
States offload onto property taxes.
States without income taxes tend to have higher property burdens. Federal note: property tax is a state and local instrument, not federal. A federal consumption-tax replacement does not itself raise property taxes; the issue is isolated to state-level revenue design.
Revenue Volatility
Tourism and oil swing with the cycle.
State revenue in AK (oil) and FL, NV (tourism) is more cyclical than a broad income tax. Federal note: a national consumption base is larger and less concentrated than any single state's, which reduces — though does not eliminate — cyclical exposure. Counter-cyclical reserves and stable baselines would need to be part of the statutory design.
Infrastructure & Services
Some states underfund services.
No-income-tax status correlates, in some states, with lower per-capita spending on roads, schools, and public services. Federal note: the federal replacement is a revenue-neutral substitution, not a tax cut. It preserves the revenue; it does not reduce it. Service levels are a separate legislative question.
The honest bottom line: states without an income tax succeed not by eliminating taxation, but by shifting it to consumption, property, and external revenue sources. The federal proposal applies the same principle — minus the parts that only work at the state level — on a broader and more stable base.
06 From States to Federal
No-income-tax states are not tax-free. They are tax-shifted, and the shifts have costs. A credible federal proposal has to name them.
What translates.
The central shift — from personal extraction to transactional commerce — scales cleanly. A broad-based federal consumption tax replicates at the national level what sales taxes accomplish in no-income-tax states, but on a larger base and with a prebate to address regressivity.
No annual individual returns.
No wage withholding by employers.
Collected at the point of sale, once, on new goods and services.
Administered largely by existing state sales-tax infrastructure.
What does not translate.
The state playbook has elements that only work at the state level, and the federal proposal must not pretend otherwise:
Federal transfers — the federal government cannot transfer to itself.
Interstate migration — there is no “out-of-state” for federal tax purposes.
Tourism and natural resource revenue are geographically specific; they cannot carry a national budget.
Property tax is a state and local instrument and should remain so.
07 The Federal Mechanism — H.R. 25
The Fair Tax Act of 1999, reintroduced every Congress since, is the standing legislative expression of this design. It is not theoretical. It is drafted, scored, and available to any Member who wants to carry it.
Element
H.R. 25 Design
Why It Matters
Base
New goods & services at retail
Single-point collection; avoids the compounding of cascading taxes.
Rate
23% inclusive (30% exclusive)
Sponsors' estimate for revenue neutrality against the taxes it replaces.
Prebate
Monthly, universal, poverty-line
Every household receives a monthly advance rebate equal to tax on spending up to the federal poverty level — no means-testing, no paperwork.
Replaces
Individual income, corporate income, payroll, estate, gift
Eliminates the IRS as a revenue-collection agency for individuals; dissolves wage withholding.
Administration
State sales-tax authorities
Uses existing state infrastructure to collect and remit; federal overhead is minimized.
Constitutional Footing
Excise under Art. I, § 8, cl. 1
An indirect tax on transactions — within the Framers' original four categories, without need for the Sixteenth.
08 The Legislative Path
01
Reintroduce.
H.R. 25 carried in the current Congress. Senate companion introduced.
02
Mark up.
Ways & Means hearings; CBO and JCT scoring against a revenue-neutrality baseline.
03
Enact the replacement.
Consumption tax passes and is scheduled to take effect upon repeal of the Sixteenth Amendment — not before. No revenue gap.
04
Ratify the repeal.
Article V state conventions (second clause) — the Twenty-First Amendment precedent. Two-thirds of states apply; three-fourths ratify.
The sequencing matters: the replacement is enacted first and made contingent on repeal, so that when the amendment ratifies, the new system is already drafted, scored, and ready to take effect the same day.
09 What This Is Not
Not a tax cut. The replacement is scored to be revenue-neutral. The federal government continues to fund what it funds today. What changes is the mechanism of collection, not the amount collected.
Not a panacea. The deficit, entitlement obligations, and discretionary spending are separate questions. This proposal does not resolve them. It resolves only the question of how federal revenue is raised.
Not a repeal without a replacement. An unfunded repeal is not a serious proposal, and this project rejects it. Repeal is meaningful only when paired with a constitutionally unambiguous substitute.
Not a judicial project. One hundred years of case law foreclose the courtroom path. This is an Article V project, addressed to Congress, state legislatures, and the American people.
Next
Read the full case. Share the brief. Engage your state.
The state-level evidence is empirical: nine American models, operating today, without a tax on wages. The federal translation is drafted. The constitutional mechanism is available. What remains is the political will to sequence it.