Simple Dollars & Cents Tax Reform Case Study

A comparison of the income tax and the FAIRtax, using real numbers. This will give viewers a good idea of the difference between the income tax and the FAIRtax, as each would affect their own bank account.

Not included in the video is the effect of the Flat Tax (H.R.1040), since it hurts middle-income taxpayers to give a huge break to the rich and this example uses a middle-income family. But I'll include the short version here. Under the Flat Tax, the same family would pay a net visible tax rate (including 7.65% payroll tax and after the standard deduction) of 17%, or 3% higher than under the current progressive income tax. When including embedded income and payroll taxes, their rate would go up to a whopping 31.4% of gross income - almost a third of their income and that doesn't even include the employer payroll tax that is passed on in the form of lower wages. I just glossed over that otherwise important issue, because making the point did not require it and it would take too much time to explain.

When you finish watching, go back through the video and insert the numbers for your family, to calculate your own gross and net taxes.