Is it the fairest tax of them all?

An interesting thing happens when you take actual examples and run them through the current income tax system compared to sales tax payments under the socalled Fair Tax system.

Jasper Certified Public Accountant Randy Sayers did just that, using examples from low to high incomes.

It's difficult to compare apples to apples when income tax laws allow so many different deductions. The following examples take the most basic approach, using a simple 1040 form without itemizing. For the Fair Tax simulation, it assumes you spend all that you make.

What example is closest to your own income?
Single mom, 1 dependent child under
17 years of age
Annual income $20,000
Pays $2,293 more in FairTax system

IRS tax liability (with earned income
credit) = (- $2,326)
Social security withholding $1530
net taxes = (- $796)

$20,000 minus FairTax base reduction
of $13,490 (paid back as prebate),
leaves $6,510 to spend x 23 percent
= $1,497 she pays in sales tax

Married older couple; 1 earns $20,000 in wages, 1 receives $16,000 Soc. Sec.

Annual income $36,000
Pays $1,829 more in FairTax system

IRS tax liability = $313
Social security withholding $1,530
net taxes = $1,843

$36,000 minus FairTax base reduction
of $20,031 (paid back as prebate),
leaves $15,969 to spend x 23 percent
= $3,672 they pay in sales tax

Married young couple 2 dependent children under 17

Joint annual income $55,000
Pays $322 more in FairTax system

IRS tax liability = $1,914
Social security withholding $4,208
net taxes = $6,122

$55,000 minus FairTax base reduction
of $26,981 (paid back as prebate),
leaves $28,019 to spend x 23 percent
= $6,444 they pay in sales tax

Married couple, 2 dependennt children over 17

Joint annual income $55,000
Pays $1,678 LESS in FairTax system

IRS tax liability = $3,914
Social security withholding $4,208
net taxes = $8,122

$55,000 minus FairTax base reduction
of $26,981 (paid back as prebate),
leaves $28,019 to spend x 23 percent
= $6,444 they pay in sales tax

Single professional 1 dependent child under 17

Annual income $120,000
Pays $4,903 LESS in FairTax system

IRS tax liability = $21,820
Social security withholding $7,580
net taxes = $29,400

$120,000 minus FairTax base reduction
of $13,490 (paid back as prebate),
leaves $106,510 to spend x 23 percent
= $24,497 he pays in sales tax

Married professionals, 1 self-employed 1 dependent child under 17

Joint annual income $138,000
Pays $11,031 LESS in FairTax system

IRS tax liability = $20,975
Social security withholding $16,389
net taxes = $37,364

$138,000 minus FairTax base reduction
of $23,506 (paid back as prebate),
leaves $114,494 to spend x 23 percent
= $26,333 they pay in sales tax