The FairTax Prebate: More than Just Help for the Poor

Most people see the prebate as just a way to untax the poor; or to convert a generally regressive sales tax into what we will come to know as the (progressive) FairTax. Those are all great and wonderful reasons to enact the FairTax but for some people it just isn’t enough. Well, let me say that the FairTax is much, much more than just that.

Let’s look at it from another angle. The prebate does what was mentioned above, and effectively I might add, but it also promotes a smaller, more effective government. How?? You ask? By closing the loopholes that the current (and any other income) tax system leave wide open to corruption.

Loopholes in the tax system allow lobbyists to lobby for tax breaks, they allow politicians to pick winners and losers (at our expense), and they cost taxpayers money (as opposed to saving us money, which is the reason for having them). See: Solyndra!

Politicians have long lost their sense of direction. At one time, politicians worked for “We the People” of the United States of America. Now, it seems they care only about making money to fund their vices and illicit habits. The FairTax prebate eliminates the loopholes that those corrupt politicians exploit for their own money-making purposes. By eliminating those loopholes, the lobbyists who lobby for tax breaks have no power in DC and the politicians they employ have no strings to pull.

Join, FairTaxNation, and FiveforFairTax in reducing the lobbying power in DC and promoting a smaller, more effective, more efficient government that works FOR us, not against us. And please, contact your Congressman today to let them know that you fully support the FairTax.

More great prebate facts here:

Staunch FairTax Supporter

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Posted in FairTax, FairTaxNation, FiveForFairTax, Poor, Prebate, Progressiveness
13 comments on “The FairTax Prebate: More than Just Help for the Poor
  1. Many are confused about the Prebate. They believe it is an entitlement and only for the “poor”. This is NOT the case. The Prebate will be given to EVERY LEGAL AMERICAN. This is what makes it “Fair”.

  2. DaddyMike says:

    I had a number of discussions with attendees at the Florida Democrat Convention this past weekend. When some of them heard that the prebate went to everybody and not just the poor, the main response seemed to be that this was just another handout to the rich and really did nothing to help the poor. These were the folks that had their minds made up and didn’t want to be confused with facts.

    Having said that, let me also say that there were many attendees that were for the FairTax. Quite a few of the people that were against the FairTax, at least were willing to discuss it in a civil manner. We, as a group, only had a very few confrontations with adamant decriers of the FairTax. By us remaining civil and not responding in kind, we negated their attempts at initiating discordance and received encouragement and compliiments from some of the bystanders.

    • Mike, next time, ask them how $2,500 per person per year is going to help someone who already has millions of dollars. Then ask them what $2,500 would have meant to them when they were struggling through college. They should get the point.

  3. […] The FairTax Prebate: More than Just Help for the Poor […]

  4. thomas schellberg says:

    I am concerned that administering this prebate will not be easy. Will all households be mailed a $10,900 check? This does reduce the regressivity, but at a potentially high administrative cost.

    This is one area where the current income tax has lower administrative costs. The personal exemption and standard deduction are automatically deducted form your taxable income, so as to reduce taxes to near zero for low income individuals. No rebate checks need to be mailed out (except, perhaps, for those with a low income credit).

    No tax system is perfect, and I suspect advocates of a consumption tax are underestimating the cost of administering such a tax system, and assuring compliance (e.g. hidden consumption).

    • No, Thomas, no households will be mailed $10,900.

      $10,900 is the current National Poverty Level. The prebate is calculated off of that number (23% of $10,900 / 12 months) = ~$209 per adult per month.

      Administrative costs for the FairTax will actually much lower than the current administrative costs to run the IRS.

      Administrative costs of the FairTax are estimated at $160M (or $0.16 Billion). But when the FairTax is done disassembling the current IRS, it will save taxpayers an estimated $9.74 BILLION. A savings of ~$9.58 Billion dollars.

  5. Lester Bennett says:

    Les Bennett for Thomas. The prebate will be handled by the Social Security Administration by electronic deposits to most people. Others by electronic filling of credit cards. It is necessary to give the prebate to all persons with a social secuirty card so as to treat all equally. The other reason is that it makes the fairtax progressive. For example the fairtax rate (with prebate) for the lower 10% of income is about minus 8. For the Top tier it approches 23%.

  6. Ray, first, the Prebate is not a “dole out”. Just like your annual tax refund, the prebate refunds the taxes you pay. It is YOUR money, the government is just ensuring that YOU don’t pay taxes on the things you need (in advance). Just because the prebate does it more frequently or more efficiently than our current system, does not make it a “dole out” or an “entitlement”, or anything of that nature.

    Second, on it’s face, the prebate untaxes EVERY legal US citizen up to the National Poverty Level, and it effectively reduces that 23% FairTax rate to give an effective tax rate (in some cases) as low as -5%, but in most cases between 0% and 12%.

    Loopholes (in this context) are created by lobbyists who believe that “their products should not be taxed”. So if the FairTax were to explicitly untax potatoes (for instance) and I felt like my potato chips should also be tax-free, I could lobby that potato chips are potatoes and should also fall into the tax-free category of potatoes. The loophole being that potato chips are unhealthy and should not even be considered a necessity.

    In other words, if ONE thing can be exempt from taxes, then everything can potentially be exempt from taxes. It’s just a matter of which lobbyists pay the most money to the most corrupt politician in DC.

    So, instead of the government telling you that things like bread, flour, cheese, milk, etc. are your necessities, the FairTax is leaving the definition of “necessity” up to you. So, if YOU feel that your family (meaning just one person, you) needs to survive on wine and crackers for the month, then ALL of your wine and crackers are untaxed up to the National Poverty Level.

    But if you feel that in order to survive, you must put a roof over your family’s head, supply them with running water, and a bed to sleep in, then once again, everything you spend on your family up to the National Poverty Level is untaxed. EVERYTHING!

    Now, by allowing YOU (meaning everyone) to determine what your own necessities are, the FairTax has eliminated all possible loopholes that could be opened by tax lobbyists. Because if EVERYTHING is exempt up to the National Poverty Level, then there is no reason to lobby. Again, because it is ALREADY EXEMPT. Understand?

  7. TN Employee $11.00 hr. Saves 646.73 per year under the 999 plan.

  8. The beauty of the prebate is that it allows each citizen to decide for themselves just what their “basic needs” are in any given month.
    Mo longer are we at the mercy of some faceless, unelected bureaucrat, or some high paid lobbyist.

    Last month, one of my “basic needs” was a new set of tires for my car. Next month, it might be a new suit.
    Whatever it is, it is MY decision.

    But the politicians have been making those decisions for us for so long, they HATE the idea of INDIVIDUAL RESPONSIBILITY, don’t they?

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