Well, in this life two things are a given: death and taxes. Under this plan, we would supposedly make the latter of the two less of a hassle to worry about.

There has been a lot of talk among the presidential candidates about the implementation of a “Fair Tax.” Such a program would institute a national sales tax of 23 percent in place of the current federal tax system we have – no more IRS, no more income taxes, or any other taxes for that matter, from the government... just a national sales tax.

Plus, because sales taxes are inherently regressive – that is, they place a stronger burden on the poor than they do on the rich – the Fair Tax plan would also call for “prebates” to be given out to lower-income individuals to compensate for the higher sales tax.

This sounds very appealing to a lot of people. Who wouldn’t want to live in a world without income tax? Well, in this life two things are a given: death and taxes. Under this plan, we would supposedly make the latter of the two less of a hassle to worry about.

The Fair Tax even has the support of a few presidential candidates, including Republican Mike Huckabee and Democrat Mike Gravel. And why not? Under this tax system, the most anyone could ever spend on taxes would be 23 percent - and that’s only if you spent every penny you earned!

Except that’s not exactly how it would work. The 23 percent sales tax would be a “tax-inclusive” number. The real rate at which taxes would be placed would be closer to 30 percent. So, if you paid $100 for an item, you could expect to pay $30 extra in taxes.

The reason, however, that Fair Tax proponents can get away with saying 23 percent is that 30 divided by 130 is equal to 23 cents. So the tax isn’t exactly set at what the proponents say it is, and it’s higher than the average consumer is likely to want to spend.

A second problem is that, while prebates will be given to the poor, the tax is still, nonetheless, regressive. The prebates merely shift the position of burden the tax would create, from the poor to the middle class, who earn “too much” to receive prebates. Those within the middle class would pay a substantially higher tax rate than those who were among the rich.

For example, if a middle-class income earner made $50,000 a year and a rich person earned $400,000 and they both intended on buying the same product that cost $6,000 (which, after the Fair Tax were implemented, would result in the product costing $7,800 with a tax of $1,800), the rich person would end up paying less of a tax than the middle-class person. The rich person would pay less than 0.5 percent of their income towards the taxes; the middle-class person would pay 3.6 percent.

That’s just the taxes on a single good. Imagine the taxes a person would have to spend on living expenses, and tell me who you think would pay more proportionally. If both people are buying the same product, the rich person will always pay a lower percentage of their income towards taxes under the Fair Tax model.

The Fair Tax is an interesting tax model, worth investigating for yourself. It is, however, a tax model that unfairly treats the middle class by punishing them with a higher rate of taxes on goods. Members of different income classes may pay the same rate on sales taxes, but when compared with income the Fair Tax greatly benefits the rich.

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