The prebate is an integral part of the FairTax, and essential to one of the fundamental principles upon which the FairTax is built, namely an individual’s right to the fruits of their labors comes before any claims the federal government might have upon that person. In other words, under the FairTax, citizens are allowed, and expected, to take care of themselves and their families first, and then, after those expenses are addressed, provide a portion of their “extra” resources to fund the essential functions of our National government.
The prebate isn’t a handout, entitlement, or any redistribution of wealth. It is simply a return, to each person, the taxes paid on purchases of “essentials”, as defined by the poverty level. Each month, each individual, or household, would see a “return” of the taxes that will be collected as they make purchases of essential goods and services. It is money that belongs to the individual, and money that, under a perfect system, would not have been collected by the federal government in the first place.
It is no more a handout, entitlement, or form of welfare than the present system of income tax refunds that the IRS utilizes every April 15th.
But many opponents of the FairTax are trying to misrepresent the prebate as a means of undermining the FairTax itself. Some of the more common claims, such as those used by Senator Sherrod Brown of Ohio, is that “the prebate plan would cost the federal government between $600 and $700 billion annually, making the total costs of the prebate larger than any other category of federal spending.” Mr. Brown apparently doesn’t realize that the return of monies to which you are not entitled isn’t a cost, it is fair, honorable, and just.
FairTax detractors also like to maintain that the prebate will be a source of large-scale fraud, and, to be truthful, the potential does exist. After all, we have, under the present system, cats, dogs, frogs, unicorns, and all sorts of other
mythical creatures, registered as exemptions or dependents for Earned Income Tax credits. Not to mention the legions of dead people, particularly inIllinois, who file returns every year. Apparently with great success. At least under the FairTax program, those wishing to defraud the system will have to file every year, provide valid social security numbers, and risk detection when records don’t match up. Something that the current system, by its own admission, has been incapable of doing as evidenced by the cases of Secretary Geithner, Congressmen Rangell and Daschell, and others who “avoid” paying more than $350 billion due under the current income tax system (IRS) Since the total “size” of the prebate is estimated to be around $600 billion, a fraud rate of more than 50% would have to exist in order for the FairTax to see the same levels of fraud and evasion tolerated, or condoned, under the current system. Rather than being a haven for tax fraud, it seems likely fraud will be less, not more, under the FairTax.
Using a similar logic, other opponents of the FairTax claim that the estimated cost of the prebate would be approximately $600 billion, larger than the budgets of Agriculture, Commerce, Defense, Education, Energy, Homeland Security, Housing and Urban Development, and Interior combined. And the size of the prebate alone is reason enough to dump the FairTax. Leaving aside the fact that these monies are never “owned” by the government, what they fail to share with the audience is that the current income tax refunds, exemptions, and loopholes amounts to more than $945 billion, “costs” that would be eliminated under the FairTax. Using our opponents logic, the Fairtax, by itself, could “save” more than $300 billion per year, which could be used to pay down the National Debt.
Opponents of the FairTax depend upon an uneducated, superficial, electorate to get away with their misrepresentations and distortions, and no where is that more true than when it comes to the prebate and its impacts. Rather than letting them get away with such blatant disrespect, opponents of the FairTax, like Senator Sherrod Brown, need to be called out and chastised for their venal and malicious behavior, dishonesty, and disrespect.