 The FairTax 's effect on the distribution of taxation or tax incidence ( the effect on the distribution of economic welfare ) is a point of dispute . The plan 's supporters argue that the tax would broaden the tax base , that it would be progressive , and that it would decrease tax burdens and start taxing wealth ( reducing the economic gap ) . Opponents argue that a national sales tax would be inherently regressive and would decrease tax burdens paid by high @-@ income individuals . A person earning $ 2 million a year could live well spending $ 1 million , and as a result pay a mere 11 % of that year 's income in taxes . Households at the lower end of the income scale spend almost all their income , while households at the higher end are more likely to devote a portion of income to saving . Therefore , according to economist William G. Gale , the percentage of income taxed is regressive at higher income levels ( as consumption falls as a percentage of income ) . 
