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The Bill was written to include a prebate, instead of exempting certain items, for several reasons.

1. Giving the government the power to determine what is or is not a necessity transfers power back to them by giving them an opportunity to sell “exemptions” in exchange for campaign cash. Taxing everything while providing a prebate removes the power of K Street lobbyists.

2. Providing every legal resident with a prebate provides the greatest possible choice to the individual. My market basket of necessities may be and probably is different from your market basket of necessities. With the prebate, we are free to choose what we wish to purchase effectively tax free.

3. Without the prebate, the tax is truly regressive and the Democrats would NEVER allow it to pass.

In summary, the prebate provides the individual with the greatest possible choice, removes the influence of lobbyists and allows the Fair Tax to be more progressive than our current system.

Well, again... why even have a rebate? Why not just exempt certain items such as food, clothing, and medical care?

The rebate and an exemption schedule are equivalent in intended effect, i.e. to avoid taxing the essentials of life. A rebate is a more effective approach than exemptions, since the rebate:

Allows the individual to determine the specific spending needs of their situation
Requires no modification of the taxing system to achieve the desired effect
Avoids wasting time debating what should be exempted and the political influence associated with the debate
Eliminates the perverse influence of the tax system to influence what is produced.

The cost of administering the rebate program itself is limited to disbursing the funds and making sure there is only one rebate issued per actual person. If a person doesn't apply for a rebate, they have nothing to do with the rebate program.

It occurs to me someone should mention the basic premise of the FairTax. The current income and payroll tax system is perverse, unfair, incorrect, indefensible, incompatible with a healthy economy, dangerous to our future as a nation and basically un-fixable. Every time we meddle with income tax to fix some problem, we create new opportunities for influence-peddling and indulgences, taking a step closer to bureaucratic despotism and the dissolution of freedom. Or the chaos of revolution - after all, you don't think folks will stand for this forever, do ya? As long as there is a direct tax on individuals someone will desire to wield it as an instrument of power and influence. And we'll never get the issue of spending for power and influence.

But we can't just throw the whole thing out without causing tremendous upheaval and destroying the country. That's the status quo the spenders and looters would prefer, to prevent us interfering with their power. The FairTax is the answer to the challenge. Replace the payroll and income taxes with the FairTax and the relationship between spending and taxation becomes crystal clear. The tremendous influence of the government over social policy, which has always been misused, is now diminished to let us live freely again.

So, I view the FairTax as kind of a litmus test. Are you going to be part of the problem or part of the solution?