FairTax Overview
Research Brief
The FairTax Reduces the Tax Burden for Low and Middle Income Households
When evaluating various tax plans most people want to know how it affects them. That is a difficult
question to answer; it depends. It depends on how you measure the tax burden. Ideally, the true
measure of the burden of a tax is the change in the individual’s economic situations as a result
of the change in the tax. “The changes should be measured as the effects on everyone’s net-of-tax
income after all economic adjustments have run their courses. The burden measure should include not
only changes in people’s after-tax incomes in a single year, but the lifetime consequences of the tax
change as well.”66
Average remaining lifetime tax rates are a best estimate of these “lifetime consequences.”
To calculate the average lifetime tax rate we add up all the federal income and payroll taxes that a
person will pay over the rest of their life and subtract from it the benefits they receive to get a net taxes
to be paid. In the case of the income tax, Social Security benefits67 are subtracted from taxes paid and in
the case of th H