FairTax Update: Prebate News

Good news on the Prebate aspect of the FairTax.

While I do not have the specific details, today on Neal Boortz's show the head of Americans for Fair Taxation spoke of a new wrinkle in the debate.

One of the most common criticisms of the HR 25 is to claim that it will be too expensive to implement, specifically the prebate system. And granted, mailing a check to every American household monthly would be expensive. These arguments ignore the overwhelming numbers of benefit checks regularly mailed by our government currently. They similarly ignore the prevalence of direct deposit and other electronic payment distribution technologies so common in today's society which could cut these costs dramatically.

However, today we learned that a number of financial institutions are actually offering to PAY the Federal government for the ability to distribute this prebate to their customers.

So let's assume that John John's Bank is one of these institutions. And that you have a John John's credit card. So John John's Bank, with your permission, would simply credit your account for the amount of the prebate at the beginning of each month and PAY the Federal government for this privilege. I am still researching this new development, but I believe the same would apply to John John's Bank's checking accounts as well.

Either way, they will pay the government to let them give you the prebate money on the assumption that you'll use their institution to spend the money, which you probably would be doing anyhow. After all, if you have a John John's credit or banking account, you'll be giving them money anyhow. That's where you'd cash the check or sned a payment too anyhow. So everybody wins.

And now, we are not talking about the cost of the government to distribute prebates, but instead about the additional funds the government will GENERATE by distributing the prebate.

I'll keep you posted.

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As a refresher, the Fairtax is a plan (and bill HR 25) to replace ALL Federal taxes (including income, embedded business, and payroll) with a single 23% sales tax on all NEW goods and services. As a part of this plan, a "prebate" would be enacted. This prebate is intended to ensure that no American pays any taxes on the money they spend up to the poverty line.

In other words, if the poverty line (for example) is $12,000 per year, or $1000 per month for a single individual, then that individual will be given the amount of money they'd be asked to pay in Fairtax on that dollar amount, $230 per month. The payment comes at the first of the month so the money is in place to pay the taxes from the beginning. The amount is based on existing, often updated figures from the Department of Health and Human Services. And this prebate goes to every American household, regardless of income. No American would then pay taxes on the most basic necessities of life.

For more information, explained better than I have here visit fairtax.org