A comparison of the FairTax vs. the Progressive Tax

fairtax.rb

# FairTax vs. Progressive Income Tax

# DISCLAIMER: This of too simple and doesn't take the rebate/prebates into 
# account but illustrates how consumption based taxation can be regressive.

# Current income tax brackets would be the equivalent of 16.9% of income for the middle fifth 
# and 23.74% for the upper fifth.

# http://www.moneychimp.com/features/tax_brackets.htm
# Results in $7,361 on $44,943 of earnings.
# and $35,607 on $149,964 of earnings.

# Source for income levels and consumption:
# http://www.nytimes.com/2008/02/10/opinion/10cox.html?adxnnl=1&adxnnlx=1313514027-cVKxfzOnFkK9p4YLBvGyCg

# Middle Fifth: 44943 (income) and 34476 (consumption)
# Upper Fifth: 149,964 (income) and 69,864 (consumption)

puts "Remaining earnings with different tax systems:"
puts "-------------------------------------------------------------"

middle_bracketed = 44943-7361-34476
middle_fair = 44943-(34476*1.3)
puts "\n\nMiddle Fifth with Progressive Income Tax: #{middle_bracketed}"
puts "Middle Fifth with FairTax: #{middle_fair}"

upper_bracketed = 149964-35607-69863
upper_fair = 149964-(69863*1.3)
puts "\n\nHighest Fifth with Progressive Income Tax: #{upper_bracketed}"
puts "Highest Fifth with FairTax system: #{upper_fair}"

puts "\n\nChange in money left over after taxes and consumption if we use the FairTax:"
puts "-------------------------------------------------------------"
puts "The average middle class has: #{middle_fair-middle_bracketed}"
puts "The average upper class has: #{upper_fair-upper_bracketed}"

output.txt

Remaining earnings with different tax systems:
-------------------------------------------------------------


Middle Fifth with Progressive Income Tax: 3106
Middle Fifth with FairTax: 124.199999999997


Highest Fifth with Progressive Income Tax: 44494
Highest Fifth with bracketed FairTax system: 59142.1


Money left over after income tax and consumption:
-------------------------------------------------------------
The average middle class has: -2981.8
The average upper class has: 14648.1