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Monday, May 28, 2012

#3 Provide a Monthly Tax Return


You hear the word "fair" used quite a lot in campaign speeches; "fair shake", "fair share", "fair shot". But you don't often hear "FairTax" from either side of the political spectrum.  This got me wondering what their definition of "fair" is?  Now, I already know what "fair" means because I went to the source.  Two years ago while visiting my grand kids I asked them "What does FAIR mean?"  I figured they would know because they were always saying "that's not fair" whenever they lost an argument with their parents.  All kids seem to have a built-in compass when it comes to fairness.  That may be the reason they get along better on the playground when their parents aren't involved.  Kids can spot a cheater a mile away and aren't afraid to call it like it is.
My oldest grand daughter was 10 at the time, active in several team sports, she spoke first; "Fair means everyone plays by the same rules" (fair shake, i.e. honesty).  My second grand daughter, three years younger yet in constant competition with her older sister quickly said "Fair means, I get the same" (fair share, i.e. equality).  My grandson (five) had three strikes against him from the day he was born; he's the youngest, he's a boy, and he's out-numbered two to one.  His answer was "Fair means I get some, too" (fair shot, i.e. inclusion). He doesn't care about rules or the amount, he just doesn't want to be left out.
So, there you have it, FAIR means honesty, equality and inclusion, or as our Founding Fathers expressed; ...liberty and justice for all.  But some of our politicians think "fair" means "from those who have money to those who don't" without regard to personal responsibility.  I'll stick with my grand kids' definitions.
Does our current tax code meet your childrens' fairness standards?  Do our politicians?   FairTax Dave


Title II, Sec. 201, Subtitle A, Chapter 3 explains the Family Consumption Allowance which is know as a prebate.  Many have a hard time understanding this provision of Bill HR-25 because they try to relate it to Welfare or other Social Assistance programs provided by the federal government.  The prebate is not a hand-out, it is a monthly tax return without all the forms, filings and deadlines.  The prebate is based on the premise that no American should pay taxes on life's essentials.  The prebate is the great equalizer, it un-taxes the poor while reducing the tax burden on the middle class, plus caps the maximum tax on the wealthy.  The more you spend beyond the poverty level the more tax you pay.  Therefore, those of wealth who choose to spend their money will pay more tax than those who choose to be frugal.  And those of limited resources will pay little if any tax.

"The prebate is voluntary.  Those of great wealth will most likely not participate, perceiving the prebate as inconsequential money better left in the U.S. Treasury as their gift to the government.  And those who wish to remain anonymous in our society will also decline the prebate to protect their privacy.  Thus, leaving the prebate program to those most in need of it's purpose... 99% of American families."

Compare the prebate to our current tax code where tax deductions are provided for each member of the family to be subtracted from your gross income before taxes are assessed.  In the FairTax system a tax return is based on the size of your family and the national poverty level as determined by the Department of Heath and Human Services who have been calculating poverty levels for over 60 years.  Welfare, Medicare, Social Security and other social programs calculate their benefits (payments) from the same source.  No need to create a new department within the government to support the prebate program, one already exists. 

No American should pay tax on their basic needs
The tax return is equivalent to 23% of the poverty level for each family size.  (Poverty Level is the average amount of money a family requires to pay for their basic needs, i.e., to survive.)  Based on 2012 figures, a single person would receive $214 each month and a married couple would receive double that amount, $428.  Two singles living together would each receive $214.  $76 is added for every family dependent.  The monthly poverty level for a family of five would be $2,852.  Included in that $2,852 is 23% tax which equals $656.  The prebate is paid at the beginning of each month; that's why its called a prebate, not a rebate.  Each year the prebate amounts will change to adjust for inflation, cost of living.

"Take a moment to calculate the change in your family's cash flow under FairTax.  Add your prebate to the monthly increase in your take home pay (remember, no more taxes taken out of your check).  This totals hundreds and hundreds of your earned dollars in your hands every month for you to choose what to do with it.  Just what would you do with it? down some bills? ...fix up the house? for a down payment on a better home? ...put money away for college? ...stash cash for a well deserved vacation or new car? ...give more to your favorite charities? a nest egg for retirement?   It's your money, you choose what to do with it."

Bill HR-25 lists three options for method of payment; direct deposit, Debit/Smart Card or mailed check, but that may be reduced to two options in accordance with future changes to Social Security policy.  Of course a person must be of legal age to receive a prebate payment.  In addition there are four qualifications a person and family members must meet to be eligible for a prebate.

1 - You must be an American citizen and be able to prove it.  FairTax has nothing to do with immigration laws, but it does provide an attractive incentive for foreigners, with the desire to stay in the United States, to enter our country legally.  Apply for citizenship, work and live among us for five years, obey our laws, study our history, learn our language, pass our citizenship test and become an American citizen, then as a reward for following our laws, register for the prebate.
Any American can receive a monthly prebate
2 - You, as well as each member of your family above the age of two, must have a valid Social Security number.
3 - You must live in the United States thereby becoming a contributor and participant in our economy.
4 - You must not be incarcerated.  If you are, the Fed and/or State is already providing for your basic needs.  Your family, however, will still be eligible for the prebate.

Do you qualify?  A person's income or wealth has no affect on eligibility.  You can be on welfare or you can be a millionaire, or anywhere in between.  FairTax is about personal spending, not personal income or net worth.  The prebate makes FairTax progressive, meaning those who spend less money pay less tax, and those who choose to spend more money pay more tax, but no one pays more than 23% total tax.  This upsets the "tax the rich" crowd who use Class Warfare to trick the public in believing their poverty is the fault of the rich.  Study after study by our best economists conclude FairTax has a greater positive impact on the poor and middle income classes, but without over taxing the higher wage earners.  Also, under FairTax, wealth will finally be taxed when it's spent.

"I am opposed to millionaires, but it would be dangerous to offer me the position"   Mark Twain

FairTax is non-denominational, non-partisan, and non-discriminatory.  It doesn't matter what place of worship you attend or if you attend any, who you vote for or if you vote at all, what's your age, gender, skin color, ancestry, economic status, level of education, where you live, the life style you choose, or your favorite music or sports team.  If you are an American, have a valid Social Security number, live in America and not imprisoned you qualify for a prebate, period!  All you need to do is register for it.  Registration will be required every year.  Notification of change in family size will be required within a month after it occurs; birth, wedding, divorce, death, etc. are noticeable events in the American society.  These are simple rules to follow.  Break them and you will be fined plus required to pay back any excess prebate payment received.  Committing blatant fraud will be met with more serious punishment and possible jail time.

How will the prebate program be managed? 

FairTax delegates responsibility to the Social Security Administration (SSA) for executing the prebate payment program as specified in Bill HR-25.  SSA has proven to be the most efficient and best positioned Department of government to administer this program. 

"Social not a dole or a device for giving everybody something for nothing.  True Social Security must consist of rights which are earned rights, guaranteed by the law of the land."     President Harry Truman

Social Security will be bankrupt in less than 20 years
To understand this better let us examine what SSA does now.  6.2% of the money paid in payroll checks (your money from your paycheck) is sent to the SSA Trust Fund (or that's what they want you to think) from which SSA draws to pay benefits to Social Security recipients.  The problem is... this system is BROKE.  More Americans are retiring and living longer.  The American work force is growing at a much slower rate and cannot produce the Payroll Tax needed to support the rapidly expanding obligation to the retired seniors.  The "Trust Fund" contains mostly IOUs from Congress.  Money going in doesn't stay for very long.  SSA is facing real bankruptcy in a few decades or less.  High unemployment, unreported employment, and a "payroll tax holiday" has reduced the revenue even further.  Social Security as we know it is unsustainable.

"For more than 40 years, the United States Congress has shamelessly used payroll taxes intended for Social Security to fund big government spending."     Congressman Mike Pence, IN

FairTax buys time for Social Security to be saved
FairTax changes the revenue source by repealing the Payroll Taxes.  Instead, revenue from the 23% national sales tax goes into the General Fund.  A portion of the General Fund is designated to benefit SSA and Medicare.  (Remember, 23% tax = 14.91% budget + 8.09% liabilities).  The result is a solvent SSA.  Never again will any politician use Social Security payments as a political football.  The only way SSA will go bankrupt is if the General Fund pot becomes empty.  Then our entire country will be busted.  If we don't reduce our debt we will follow the fate of Greece and other countries who over-promised and over-spent to secure political power.  Reforming Social Security should be a vital component of any government debt reduction plan.

FairTax makes it easier for Social Security to reform
As a result of FairTax, the SSA has acquired two more responsibilities.
First, verify Social Security numbers of approximately 140 million American family "head-of-household" and family members.  This is not as monumental a task as you may think.  Remember, they already have your information, they only need to verify it.  SSA has offices in every State who can complete this in a few months max.  This is a terrific opportunity for the SSA to reset their data base, and flush out violators and perpetrators of fraud and identity theft.  Another hidden benefit of FairTax if SSA chooses to take advantage of it.
Second, make monthly prebate payments to 140 million Americans.  Issuing payments is what the SSA does best.  Most are by direct deposit, some by Debit/Smart Card, a few still by mail.  When was the last time you heard of anyone not getting their Social Security payment?

"The Social Security program plays an important part in providing for families, children, and older persons in times of stress.  But it cannot remain static.  Changes in our population, in our working habits, and in our standard of living require constant revision."     President John F. Kennedy

It's also a great opportunity for Congress to resolve the Social Security dilemma.  Those Americans who have contributed most, if not all, of their working lives to Social Security are deserving of every benefit promised.  But those in their 40s or 30s or 20s who have not contributed as much and, after FairTax becomes law, would have the payroll money in their hands to invest in their own retirement plans.  These are positive situations to work with.  The SSA can determine at what age or years or amount of contribution qualifies for 100% of the benefits.  Then SSA can schedule and announce future reductions in retirement benefits for the younger contributors in ways that properly represent their previous payroll taxes paid and their employment history.  Now before you get your knickers in a knot, just hear me out... FairTax has nothing to do with future changes to Social Security, it just provides a golden opportunity to fix the Social Security program in a way that could be fair and beneficial to everyone.  That's better than the sacrifices our government is currently contemplating.

"There are only six things you can do with money; spend it, invest it, donate it, hide it, lose it, or have it taken from you by criminals and governments which, some may argue, are one in the same."

#1 repeals all taxes on income.  #2 establishes a national sales tax to replace the income tax revenue.  #3 provides a monthly tax return to make the system fair for all citizens.  Only one action left, the final piece of the puzzle, how is the FairTax collected?  That's the topic of the next entry; #4 authorize the State to collect the tax.

Here is another excellent book written in 2008 by Neal Boortz and John Linder (with support from Rob Woodall) that exposes the lies lodged against FairTax... as well as the truth about it.
By the way, have you visited the FairTax website yet?  Have you copied the HR-25 Bill and begun to read it?  Did you get a copy of "The FairTax Book"?  The facts are there for you to discover.  FairTax is real.  What are you waiting for?

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