Yes, typically a sales (consumption tax) does effect to poor more than the rich, because the poor tend to consume 100% of their earnings to survive, whereas the

Yes, typically a sales (consumption tax) does effect to poor more than the rich, because the poor tend to consume 100% of their earnings to survive, whereas the rich only consume a very small portion of their overall earnings. The Fair Tax attempts to address this via 2 mechanisms- first, it does not tax used goods. Poorer people are more likely to buy used goods than new ones. Second, the Prebate. Under the Fair Tax, the a prebate is given, based on the Federal Poverty Line, and the amount of tax that would be paid if a family spent up to the federal poverty line. Families that are spending less than the Federal Poverty line actually would pay negative taxes, and those spending more, would progressively be taxed more. As written, some analysts of the Fair Tax have criticized it for putting the squeeze on the middle class- because many spend everything/most of what they earn, but earn well over the poverty line. Whereas the wealthy still consume very little of their overall income, and the poorest of the poor pay negative taxes. I would tweak the prebate a little from this model, requiring the legislature to specify the prebate level each year as a part of their budget. This means they can't hide behind tweaking the way the poverty line is calculated- they have to make the decision directly, and be held accountable for it. I would also require the legislature to set the actual tax rate annually or at some other regular interval.