 Gale analyzed a national sales tax ( though different from the FairTax in several aspects ) and reported that the overall tax burden on middle @-@ income Americans would increase while the tax burden on the top 1 % would drop . A study by the Beacon Hill Institute reported that the FairTax may have a negative effect on the well @-@ being of mid @-@ income earners for several years after implementation . According to the President 's Advisory Panel for Federal Tax Reform report , which compared the individual and corporate income tax ( excluding other taxes the FairTax replaces ) to a sales tax with rebate , the percentage of federal taxes paid by those earning from $ 15 @,@ 000 – $ 50 @,@ 000 would rise from 3 @.@ 6 % to 6 @.@ 7 % , while the burden on those earning more than $ 200 @,@ 000 would fall from 53 @.@ 5 % to 45 @.@ 9 % . The report states that the top 5 % of earners would see their burden decrease from 58 @.@ 6 % to 37 @.@ 4 % . FairTax supporters argue that replacing the regressive payroll tax ( a 15 @.@ 3 % total tax not included in the Tax Panel study ; payroll taxes include a 12 @.@ 4 % Social Security tax on wages up to $ 97 @,@ 500 and a 2 @.@ 9 % Medicare tax , a 15 @.@ 3 % total tax that is often split between employee and employer ) greatly changes the tax distribution , and that the FairTax would relieve the tax burden on middle @-@ class workers . 
