There are a number of differences between the FairTax plan and other plans occupying the current political debate. I thought of contrasting the 9-9-9 plan specifically however it seems that Herman Cain has been through enough this past week. He certainly does not need another independent blogger giving their unwarranted opinion. This is a much better opportunity to discuss the plan that best serves America’s future, the plan that goes the furthest toward setting us on the course for lasting success than any other alternative that exists today. In my time giving speeches around the
Dallas/Fort Worth area of Texas one question has been asked more than any other. It is in regards to the prebate aspect to the FairTax. I would like to delve into that portion of the plan in an attempt to answer any questions, dispel any uncertainties, and correct some mischaracterizations.
First of all the prebate is a monthly check given to each American household that covers the sales tax portion of a basic basket of goods up to the poverty line. Without any further study some conservatives are hesitant to back this part of the plan. Part of the problem is our current situation. Roughly 50% of the population does not pay into the income tax system and immediately throwing a
23% sales tax would hamper the economy from the outset. This provides a way to untax essentials in a way that treats everyone equally without providing politicians the ability to start writing loopholes into the law.
Essentially the prebate is exactly the same as a tax rebate. The FairTax assumes that the American household purchases enough to survive the month, meeting the cost of basic necessities. The FairTax then reimburses the household for the cost of only the sales tax up to the poverty level as determined by the Department of Health and Human Services. This guarantees that all Americans are treated equally under the law and not targeted based solely upon income. All Americans receivethis prebate check and the amount is dependent on the size of the household not income.
|One-adult household||Two-adult household|
|and 1 child||$14,710||$3,383||$282||and 1 child||$25,600||$5,888||$491|
|and 2 children||$18,530||$4,262||$355||and 2 children||$29,420||$6,767||$564|
|and 3 children||$22,350||$5,141||$428||and 3 children||$33,240||$7,645||$637|
|and 4 children||$26,170||$6,019||$502||and 4 children||$37,060||$8,524||$710|
|and 5 children||$29,990||$6,898||$575||and 5 children||$40,880||$9,402||$784|
|and 6 children||$33,810||$7,776||$648||and 6 children||$44,700||$10,281||$857|
|and 7 children||$37,630||$8,655||$721||and 7 children||$48,520||$11,160||$930|
The chart above sets out the amounts sent to the corresponding households based on the 2011 numbers in the DHHS povertyguideline. As you can plainly see this in not a questionable theory that must
be figured out in committee; we do not have to pass the bill to find out what is in it. It ensures that no one has to pay taxes on basic needs and the FairTax achieves this by focusing on the freedom of the citizen instead of the power of the bureaucracy.
Since this prebate is a reimbursement based on an assumption of compliance it could not be considered a welfare program. In fact the cost of the prebate is significantly less than the cost of the innumerable deductions and exemptions in our current code. The cost of the prebate is estimated to be $489 billion if 100% of the households participate. The same paper cites a Congressional Joint
Committee on Taxes study that found the full cost of tax breaks in 2006 to be over $945 billion. The prebate not only untaxes the poor on the necessities and treats every household in America equally it does it for half the price. This is merely another example of the cost savings present in the FairTax.
There are a few unstated serendipities to just the prebate part of the overall FairTax plan. The first is the encouragement of families. The FairTax does not have to encourage families; it merely ends the discouragement under the current tax code. However, the next benefit is the real game changer. Our current tax code penalizes every citizen, it confiscates wealth and punishes success. Those that benefit most from this system are those that do not pay into it. Illegal aliens do not pay into the income tax system yet can take part in the many programs provided by the government paid for by tax dollars. Under a FairTax system legal citizens and illegal aliens alike pay into the system with every purchase. The prebate however is reserved only for the households of legal citizens. There is a tax
system on the table that actually incentivizes entering the country legally. The FairTax strips away the strongest financial advantage for crossing the border illegally.
The prebate is one aspect of a fundamentally transformative law. It shifts the focus of government to the people and reverses the influence the tax code has on illegal entry to the United States. Again this is only one aspect of the FairTax and it alone sets it head and shoulders above the other plans presented which only seek to tweak the current system. The FairTax demolishes a broken structure. It replaces it with a plan that works to treat everyone equally and encourages following the law. Is that too much to ask from Washington?
Read more at http://fairtaxcometh.com/