But so are many enthusiastic conservative tax-cutters, like the Wall Street Journal editorial board and Grover Norquist. Not surprisingly, liberal groups who judge the proposal regressive are against it. Prominent party figures like Ted Cruz, Mike Huckabee, John McCain, Rick Perry, and Herman Cain have all championed the idea over the years. Buddy Carter (R-GA) already has 23 co-sponsors for the current iteration. It’s a radical idea, but one which since its first introduction to Congress in 1999 has been a favorite of conservative Republicans. Virtually every American would get a monthly check from the government to cover the cost of paying the tax on essentials. The FairTax, at its heart, is simple enough: It would take almost every federal tax and replace them with a fat 30 percent sales tax on everything. But one of the more important was a concession to hold a vote about a radical tax reform proposal known as the FairTax. Then we examine a hypothetical example of sales taxes paid on a flat screen television set.Kevin McCarthy had a hell of a time getting elected as House speaker, and a list of all the concessions he made to the most conservative members of his party wouldn’t fit here. First we review the federal income tax rates for 2005. The next two tabs illustrate progressive and regressive taxation schemes. A look at how the numbers work in these tax schemes helps illustrate the concepts of progressive and regressive taxes. In contrast property and sales taxes tend to be regressive in nature by virtue of the fact that they make everybody pay the same flat rate.īut if everybody pays the same flat rate shouldn't such taxes be considered neutral, neither progressive nor regressive? The key to understanding these concepts is to focus exclusively on the percentage of one's income that is paid for each type of tax. Most income tax schemes are progressive because they usually rely on graduated rates which increase the percentage of income paid as income rises. The impact of regressive taxes is exactly the opposite: they require those with lower incomes to pay a higher percentage of their income on such taxes. Progressive taxes require those with higher incomes to pay a higher percentage of their income on those particular taxes. All tax schemes can be characterized as either progressive or regressive.
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