PROGRESSIVE VS REGRESSIVE

Mr. Laurence . Kotlikoff is chair of the economics department at Boson University, a Democrat and a leading researcher and advocate for the Fair Tax. In an article published in the Wall Street Journal, March 7, 2005 he writes:

"Democrats need to listen up here. Their view that taxing sales is regressive is just plain wrong. Taxing consumption is effectively the same as taxing wages plus taxing wealth. The logic is simple if you consider the most straightforward way of taxing consumption, namely via a retail sales tax. In this case, when people spend their wags or their assets on goods and services, they pay sales taxes, meaning they end up with less to consume. This is no different from having the wages and wealth taxed, but facing no sales tax...Thus a retail sales tax, with its effective wealth tax component, is highly progressive compared, for example, to taxing just wages."

Our current system thought by many to be progressive is deceiving. With the 10's of thousands of pages in the current code giving exemptions, credits and loopholes to individuals who file the long form and page after page of schedules in effect becomes regressing because the middle class and those falling below the poverty level don't benefit from all the exemptions, credits and loopholes. The Fair Tax provides a highly progressive rebate to each household of their sales tax payments on consumption expenditures up to the poverty line.

So progressive vs regressive-the Fair Tax wins.