Swift's work is the epitome of satire and few have paralleled its mastery.
Overall, satire is characterized by its scorn or ridicule of a topic. Swift's "proposal" certainly does that from beginning to end.
But to further hone the term, Swift's work falls into two categories of satire: "formal" and "indirect." Formal satire speaks in first person (I, my, mine, etc.) For example, the speaker of the proposal argues,
"I think it is agreed by all parties that this prodigious number of children in the arms, or on the backs, or at the heels of their mothers, and frequently of their fathers, is in the present deplorable state of the kingdom...".
A Modest Proposal is indirect satire because Swift speaks as a character who is proposing a "solution" to an anonymous audience addressing the political economy:
I have been assured by a very knowing American of my acquaintance in London, that a young healthy child well nursed is at a year old a most delicious, nourishing, and wholesome food, whether stewed, roasted, baked, or boiled; and I make no doubt that it will equally serve in a fricassee or a ragout.