I was thinking about the poverty income thing. Instead of rebates, why couldn't the IRS or state DOR issue a card, a kind of ATM/Drivers' License type card, with the persons photo ID and Soc. Sec. #, to those who qualify. At the point-of-sale the customer gets his/her card scanned/swiped/whatever, and is exempted from paying the tax. The card would need to be 'renewed' periodically (to deter fraud if a poverty person finds a better job).
Nothing so complicated is required. Single rate at the cash register fixed payment each month to all households regardless of actual income or expenditure based only on household size.
No ID necessary for purchases. At the cash register everyone is treated precisely the same. The NRST is administered and collected exactly the same as state retail sales taxes are today, single rate, all new goods and services are taxed with no exception.
For the progressivity side, all legal residents will receive a demogrant called the Family Consumption Allowence(FCA) equivalent to the FairTax paid on essential goods and services. The FCA will be paid in advance, in equal installments each month. The size of the monthly FCA will be determined by the government's Poverty Level for a particular family size, multiplied by the tax rate paid to all households regardless of income or actual expenditure.
Every year, the Department of Health and Human Services [HHS] determine the "poverty level" for each family size.
|
The 2001 "FairTax" Family Consumption Allowance Figures |
|||
|
Family Size |
HHS Poverty Level |
Annual FCA |
Monthly FCA |
|
One |
$8,590 |
$1,976 |
$165 |
|
Two |
$17,180 |
$3,951 |
$329 |
|
Three |
$20,200 |
$4,646 |
$387 |
|
Four |
$23,220 |
$5,341 |
$445 |
|
Five |
$26,240 |
$6,035 |
$503 |
|
Six |
$29,260 |
$6,730 |
$561 |
|
Seven |
$32,280 |
$7,424 |
$619 |
|
Eight |
$35,300 |
$8,119 |
$677 |
1) Federal Register: February 16, 2001, Pages 10695-10697).
[ The monthly FCA for each adult is .23 * (HSS poverty level for a single person)/12 to assure no marriage penalty due to the manner in which the poverty level is dependant on family size. The monthly FCA for each child is .23 * (the incremental increase of HSS poverty level for a family with one child over no child) ] A. Geezer
A family of four, for example, could spend $24,980 per year free of tax because they will have received over the course of the year a demogrant totaling $5,745. $5,745 is the amount of sales tax paid on $24,980 in expenditures. That family spending double the "poverty level" or $49,960per year will effectively pay tax on only half of their spending and, therefore, have an effective tax rate of 11 ½ percent or half the FairTax rate.
The beauty of the FairTax is that you can control how much you pay in taxes. If you happen to save, invest or spend a portion on used [previously taxed] items, you can get your effective tax rate below 9%.
To illustrate examine the tax burden that a family of four will have at various annual expenditure levels as compared to that same family under the current system:
