Isnt a sales tax regressive, with the rich paying a much lower tax relative to their income than do the poor and middle-income groups?
All flat taxes, whether flat income or flat sales tax, are regressive–the tax burden falls disproportionately heavy on the poor and middle-income groups. This is because the poor and middle classes spend all or most of their income, and pay the FCT on most of it. The rich, on the other hand, spend only a small part of their income and therefore only pay the federal consumption tax on a small part of their income. However, the removal under Sensible Tax Reform of Social Security and Medicare taxes, which are very regressive, benefits the poor and middle classes much more than the rich. Also, a rebate of the federal consumption tax on essentially all of the purchases of the poor and much of the purchases of the lower middle class, will also help to reduce the regressiveness. However, to fully offset the regressiveness of the FCT, the fair-and-simple tax on very-high incomes will be necessary. These three actions offset what would indeed be a very regressive tax, if those adjustments are
