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The table above presents results from Kotlikoff and Rapson (2006), which directly compares the FairTax's progressivity relative to remaining lifetime resources with that under our current federal tax system. The analysis is performed for a set of stylized households that differ with respect to earnings and other economic characteristics, like house value, mortgage payments, college tuition payments, that are scaled to their labor earnings.

As indicated, the FairTax lowers average remaining lifetime net tax rates for all the stylized households, but the percentage reductions are larger at the lower end of the earnings distribution; i.e., when it comes to working households, the FairTax makes our tax system more progressive.

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