The FairTax Series: America's Road To Prosperity Part 4
In this installment of the FAIRTAX series I want to cover the “pre-bate” provision of the plan. The “pre-bate” is a provision designed to help with the basic necessities of life, to essentially “un-tax” food, medicine, utility costs, clothing, etc. up to the poverty level. It is not designed to help the “rich” buy new cars for their 16 year old as a birthday present, a new plasma TV, or that new boat or other play toy they might want. It is also not designed to allow that “poor” family to buy a plasma TV, or to buy their kids a video game. This means that the basic necessities of life will be tax-free for everyone. The basic necessities of life being tax-free, however, does leave money to help buy these other things if desired, as the decision on how the extra money is spent is up to the members of the particular household. Once again we see the playing field leveled, more money in the hands of We the People, and everyone being treated equally, “equality under the law”, I think the Constitution calls it.
Poverty level spending is defined as the amount of money necessary for a given sized household to buy the essential needs of life as determined each year by the Department of Health and Human Services (DHHS). The amount of the “pre-bate” will differ depending on the number of people in the household, not on how much income is present. I constantly hear about “fairness” from the politicians, but fairness is not really a factor in today’s tax structure. People “paying their fair share of taxes” is a class warfare tactic designed by the political class to divide and conquer We the People, not a tactic designed for actual fairness. Are those paying no income taxes paying their “fair share”? Not in my book, and I am not one of the “rich”.
One benefit of the FAIRTAX pre-bate is that it must be applied for every year. I can’t imagine Bill Gates, Warren Buffett, or other ultra-rich people applying for the Pre-bate so they aren’t likely to benefit. I can only imagine the flack these ultra rich would catch if they applied for something meant to help the least of us in America. The Pre-bate will also only go to those legally residing in the United States. It is designed to reward citizens, and those here legally with the proper work permits and authorization to be a part of our society. Those who work for money under the table pay no taxes now but will pay taxes when they spend their illegally earned wages under the FAIRTAX. They will not be able to participate in the Pre-bate as it is a provision designed to bring wage earners out of the shadows if they want to participate. I find this part rather insignificant compared to the fact that these people will actually be contributing to our tax structure through their purchases as the FAIRTAX will do. They already pay no income taxes and no Social Security or Medicare taxes as those of us legally employed are subjected to. Having the pre-bate will require those working under the table to come out into the light if they desire to benefit from the pre-bate provision.
As a household of 2, my wife and I will not benefit as much from the pre-bate as those who have larger families. It will benefit my children and grandchildren as the money taken off of the cost of the basic necessities of life will provide more money for food, utilities, and the other necessities. When they take the amount of taxes off the price of food, for instance, they can buy more food instead of paying federal taxes with that money. I am looking at the best option for the people of America and I find this to be a very fair and sensible way to implement that
This is the final installment of the “nuts and bolts” of the FAIRTAX. My final installment will cover an overview of what you have seen so far and my conclusions as to the benefits of the FAIRTAX.
I submit this in the name of the Most Holy Trinity, in faith, with the responsibility given to me by Almighty God to honor His work and not let it die from neglect.
November 25, 2011
Sounds good, but your description about the purpose of the prebate is flawed. There is nothing in HR25 that mandates that the basic necessities will be “untaxed”. In fact, the Family Consumption Allowance (prebate) can be spent on anything you wish. It is a monthly income supplement that adds to everyone’s gross income and comes at a cost of an estimated $600 billion annually. The prebate will be scored by CBO as a cash grant entitlement, not as a tax refund as so many Fairtaxers want to claim.
Entitlements are rapidly squeezing out discretionary spending in the federal budget, and we can’t stand for another huge entitlement. Perhaps a targeted entitlement for the really poor at one tenth the cost would be a better plan?
// “There is nothing in HR25 that mandates that the basic necessities will be “untaxed”.” //
Hank is right. Basically, -YOU- decide what your necessities are; NOT the government.
If -YOU- feel that -YOU- can live off of bread & wine for the month, that is -YOUR- choice. But if you’re like most responsible adults, you will put that money towards your groceries, or rent, or utilities.
But does it really matter -where- you put that money? Even if you put it in a savings account, you will have it to spend later. And when you do spend it, it will be taxed accordingly.
Another good installment, Bob. Thanks for this information.
Robert’s pitch about all of us being able to decide how much tax to pay, or what to spend our money on, reinforces my opinion that the whole “you decide” gig is badly overblown. Face it, the only decision everyone may have is whether or not to willingly lower their current standard of living in order to stiff the federal government tax collector. Here’s why.
All services are taxed, and services typically make up half of the family budget. There are no untaxed groceries or restaurant meals. No untaxed gas for the car or gas/oil for heating your home. Nothing untaxed at Wal-Mart or any of the big box stores. I couldn’t find any used item purchases in last years budget. How about you?
I have read some absolutely silly arguments about how one can go live in a cave and grow one’s own food, etc. Yes, it is possible, but not very probable. Everyone has the right to buy their underwear at Goodwill, but the vast majority will simply pay the tax and stick with their current standard of living. Keep in mind that everyone but the middle class retirees will probably have more purchasing power under the Fairtax, so drastically reducing their standard of living just won’t be necessary–or smart.