THANKS AG! That's the one I was thinking of.......
THANKS AG! That's the one I was thinking of.......
Too bad, like most things from the AFT, it's not very accurate. You can run the numbers yourself.
I took the just-released CBO numbers for 2002. The AFT chart assumes 100% of annual income equals annual expenditures so we will stick with that. There is an issue with the CBO income tax rate numbers in that they assume that the employer portion of the payroll tax is incident on the employee thus they increase the employee's income and Effective Social Insurance Tax Rate by this amount. Since you FairTaxers don't seem to think this is incident on the employee, but rather on consumers, I had to factor it out of the income and the effective rate of the taxes the FairTax replaces (it doesn't replace excise taxes so I removed them from the equation too). I also ran the numbers with the employer portion of the payroll tax incident on the employee (the CBO assumption).
|
Current Federal Tax Burden vs. FairTax |
||||||||||||
|
Income
|
Total Effective Federal Tax Rate
|
Effective Excise Tax Rate
|
Effective Social Insurance Tax Rate
|
Total Effective minus Excise minus 50% Social Ins.
|
Adjusted Income (No employer Social Ins.)
|
Federal Tax Burden
|
Income plus Family Consumption Allowance ($4,283)
|
FairTax Paid
|
Net FairTax Paid
|
Effective FairTax Rate
|
Increase / Decrease in Federal Tax Burden
|
|
| Lowest Quintile |
$ 14,400
|
4.6%
|
2.3%
|
8.1%
|
-1.75%
|
$ 13,817
|
$ (242)
|
$ 18,100
|
$ 4,163
|
$ (120)
|
-0.9%
|
-50.35%
|
| Second Quintile |
$ 33,600
|
10.8%
|
1.4%
|
9.3%
|
4.75%
|
$ 32,038
|
$ 1,522
|
$ 36,321
|
$ 8,354
|
$ 4,071
|
12.7%
|
167.50%
|
| Middle Quintile |
$ 51,100
|
14.4%
|
1.1%
|
9.3%
|
8.65%
|
$ 48,724
|
$ 4,215
|
$ 53,007
|
$ 12,192
|
$ 7,909
|
16.2%
|
87.65%
|
| Fourth Quintile |
$ 75,900
|
18.7%
|
0.9%
|
10.5%
|
12.55%
|
$ 71,915
|
$ 9,025
|
$ 76,198
|
$ 17,526
|
$ 13,243
|
18.4%
|
46.73%
|
| Highest Quintile |
$175,900
|
26.1%
|
0.5%
|
7.5%
|
21.85%
|
$169,304
|
$ 36,993
|
$ 173,587
|
$ 39,925
|
$ 35,642
|
21.1%
|
-3.65%
|
As you can see the middle class gets hit hard with the second quintile's burden more than doubling and the third's increasing 87%. The middle class taking the brunt of switch to a NRST is consistent with other distributional analyzes I have read.
| Current Federal Tax Burden vs. FairTax (Employer's portion of payroll tax incident on employees) |
||||||||||
|
|
Income
|
Total Effective Federal Tax Rate
|
Effective Excise Tax Rate
|
Total Effective minus Excise
|
Federal Tax Burden
|
Income plus Family Consumption Allowance ($4,283)
|
FairTax Paid
|
Net FairTax Paid
|
Effective FairTax Rate
|
Increase / Decrease in Federal Tax Burden
|
| Lowest Quintile |
$ 14,400
|
4.6%
|
2.3%
|
2.3%
|
$ 331
|
$ 18,683
|
$ 4,297
|
$ 14
|
0.08%
|
-95.75%
|
| Second Quintile |
$ 33,600
|
10.8%
|
1.4%
|
9.4%
|
$ 3,158
|
$ 37,883
|
$ 8,713
|
$ 4,430
|
11.69%
|
40.26%
|
| Middle Quintile |
$ 51,100
|
14.4%
|
1.1%
|
13.3%
|
$ 6,796
|
$ 55,383
|
$ 12,738
|
$ 8,455
|
15.27%
|
24.41%
|
| Fourth Quintile |
$ 75,900
|
18.7%
|
0.9%
|
17.8%
|
$ 13,510
|
$ 80,183
|
$ 18,442
|
$ 14,159
|
17.66%
|
4.80%
|
| Highest Quintile |
$175,900
|
26.1%
|
0.5%
|
25.6%
|
$ 45,030
|
$ 180,183
|
$ 41,442
|
$ 37,159
|
20.62%
|
-17.48%
|
Even with the employee paying the employer portion of the payroll tax, the middle class gets hit by a change to the FairTax. With a revenue neutral change in taxes there will be winners and losers, with the FairTax the middle class is the loser.