The Next American Revolution - The Prebate

How does the prebate work?

All valid Social Security cardholders who are U.S. residents receive a monthly prebate equivalent to the FairTax paid on essential goods and services, also known as the poverty level expenditures. The prebate is paid in advance (hence a prebate - not a rebate which is paid after the fact), in equal installments each month. The size of the prebate is determined by the Department of Health & Human Services' poverty level multiplied by the tax rate. This is a well-accepted, long-used poverty-level calculation that includes food, clothing, shelter, transportation, medical care, etc.

Here's the chart so you will see what you will be getting every month:

Look at the left hand side of the chart to find the number of people in your family. For example, there are two in our family and we are married, so I find the "2", and follow it to the right. I see an annual prebate of $4,402 and a monthly prebate of $367. Add that to the $380 that is deducted from my paycheck in the form of Federal taxes every two weeks ($760) and that's an additional $1,127 of disposable income for us.

With that extra money, I'll be able to make an extra mortgage payment every month, put extra money toward our credit card debt, get both paid off sooner, and still have money to put into a retirement account. Not to mention setting aside money for vacations and dinner out.

One of my questions was, why not just exempt those basic necessities of life in the first place and not fool with a prebate? After thinking about it, I realized that it would leave a loophole for our congresscritters to mess with. And you know as well as I do, that if they have just the teeniest of loopholes they'll manage to drive a Mack truck through it. If food and clothing and housing (for example) were exempted from the start, what would be exempted next? It wouldn't be long before lobbyists got nearly everything exempted and we'd be right back where we started.

Food: I buy groceries for daily meals and my purchases are exempted. Bill Gates has a lavish party to entertain stockholders, VIP's from other corporations and countries, and his lobster, salmon, caviar, and champagne are exempted. Why should Bill, who is a multi-billionaire be exempted for a business dinner (that he is currently able to write off as a business expense anyway)? A family dinner is one thing, but who would know whether his dinner was family or business? His dinner, which would run into the hundreds, if not thousands, of dollars to purchase would garner more in taxes than my grocery purchases. Trust me, even when the Fair Tax is passed, we won't be eating lobster, salmon, caviar and champagne. Well, maybe lobster and salmon on the very rare occassion. And I think I can safely say that Joe and Mary Lunchbox won't be eating lobster and salmon every night either. Sure, no exemption hurts the lower and middle class American some, but who is better able to pay those taxes? The wealthy who would be giving those dinners and serving that type of menu. Bill Gates doesn't throw ground beef patties and hot dogs on the grill. Leave the tax on the basic necessities of life and let the wealthy pay the big bucks in taxes.

You can work out the problems with exempting clothing and housing. My readers are smart enough to know that the wealthy don't buy off the rack, they don't shop at Walmart, and they don't buy 1500 square foot houses.

Before you start campaigning for the "little guy" (like you and me) think about who's going to be paying the bigger taxes. The wealthy - and it's usually chump change to them. And, think about who the "wealthy" are. Movie stars, politicians, corporate officers, sports stars, and let's not forget the one class that is usually forgotten, the drug dealers.

The Fair Tax is the one tax plan that makes sure that everyone pays the same amount. And what could be FAIRer than that?.