Who's Regressive? Not the Fair Tax

by Howard Johnson

In a recent article by Robert Reich, “It’s the Wages Stupid” he suggests that a consumption (national retail sales) tax must always be regressive because it would hit people in the lowest income bracket hardest.” First, he is only partially right. To be accurate, those in the lowest income brackets spend “most all” of their income on “necessities” so they can’t save.

(The FairTax gives a pre-rebate to everyone to offset the payments made in taxes up to the poverty level, currently $24,000. This makes FairTax PROgressive.)

Saving and investing are luxuries that only those with disposable income can afford. Is it really wage increases that are needed? I would suggest that it is the income tax system in America that is keeping wages low and causing the savings crisis in America.