According to its advocates, the FairTax is truly magical, a tax that is paid by no one. It is too good to be true. The FairTax is a sales tax, not unlike the taxes levied by most states, but it would require much, much higher tax rates. The President's bipartisan tax reform panel concluded that a national retail sales tax would require a rate of at least 34 percent (and probably much higher) to replace the income tax alone. Income taxes are less than 60 percent of total federal tax receipts, so the FairTax, which is intended to replace all federal taxes, would require truly astronomical rates. There would be a huge incentive for tax evasion. Sales taxes tend to be regressive, because spending declines with income. Low-income people spend all (or more) of their income. People with incomes over $200,000 spend less than 40 percent of their income on average. That is, a sales tax exempts more than 60 percent of the income of those at the top, providing them a huge tax cut. The FairTax protects low-income people with a subsidy--called a "prebate." So if low-income people are held harmless and those at the top get a large tax cut, simple logic indicates that the middle class pays much, much more in taxes. It is no wonder that the President's panel rejected it. (Besides for the complaints raised above, they were skeptical of administering the prebate, a new $600 billion welfare program.) Even conservative Bruce Bartlett, a fan of consumption taxes and smaller government, thinks that the FairTax is a seriously flawed policy and its advocates disingenuous at best. Our tax system desparately needs reform, but the FairTax is not the answer.