A sales tax is a blunt instrument, whereas an income tax maximizes the Keynesian effects of moving funds from individuals with a higher marginal propensity to save to those with a lower MPS, thus increasing consumption. Additionally, a progressive income tax counteracts the payment of net interest on debt held by the public. A single tax would either overtax the wealthy or overtax the middle class. A surtax on high incomes allows a more reasonable tax rate for a broad-based consumption tax. Splitting the broad based tax in two allows both components to be lower still, which discourages evasion. Currently, there are six major components in the tax system in the United States: a payroll tax for social insurance, a federal corporate income tax, a personal federal income tax, a personal state sales tax in many states, a state sales tax in many states and state corporate income taxes. Michael Graetz has a very good tax reform plan, although there are one or two ways I would tweak it. The components I would include are a federal VAT, a state VAT, a federal retirement insurance tax with increasing diversion into personal retirement accounts, a federal income surtax, a federal business income tax in which labor is no longer deductible to be used primarily as a vehicle to redistribute income to larger families, students (remedial, collegiate and vocational), homebuyers, patients and charitable organizations providing social services and a matching state business income tax. The VAT would cover direct government expenses, while the BIT would be set high enough to maximize the use of redistributive tax expenditures. At some point the federal business income tax would be entirely shifted to the state business income tax, with the federal income surtax to sunset when the entire public debt is retired, including contingent liabilities for social insurance and debt held by federal agencies. In the fullness of time, the retirement tax would be a customary contribution to an employee-owned firm and a mutual insurance fund of like employee-owned companies, while the social insurance costs would become customary expenditures without the need for governmental administration. A single sales tax has no potential for transferring expenditure responsibility away from public expenditure, which shows the Fair Tax is about political organization rather than being a serious plan to reform taxes.