Q: Has the Fair Tax gotten rid of subsidies for the poor, becoming only consumption?
A: According to http://fairtax.org/prebate:
“Under the FairTax, all Americans consume what they see as their necessities of life free of tax. While permitting no exemptions, the FairTax (HR25/S122) provides a monthly, universal prebate to ensure that each family unit can consume tax-free up to the poverty level, with the overall effect of making the FairTax progressive in application. This is not an entitlement, but a rebate (in advance) of taxes paid – thus the term prebate. Everyone pays taxes at the cash register.”
The overall cost of the prebate “is less than one-half of the amount of tax expenditures (standard deductions, personal exemptions, Earned Income Tax Credit, mortgage interest and charitable contribution deductions, and various other tax preferences) doled out under the current federal income tax system that are repealed when the FairTax is enacted. For 2012, the total of all of these tax breaks is estimated to be $1.25 trillion.”
To summarize, the FairTax ensures all US citizens are treated equally and that no one pay any tax on their necessities. It’s not just “the poor” who qualify or receive the prebate, but every legal US citizen who registers for it. Furthermore, the FairTax and its prebate mechanism will replace numerous entitlement programs at a lower cost to tax paying Americans.
NOTE: Tax Expenditures are programs defined under the Income tax system which will be repealed when the FairTax is enacted. Nothing in the Fair Tax Act defines which tax expenditures they are, only that specific sections of the Internal Revenue Code (which include those tax expenditures) will be repealed.