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Under H.R.25(Fair Tax Act), all legal residents will receive a monthly demogrant called the Family Consumption Allowence(FCA) equivalent to the FairTax paid on essential goods and services, also known as the poverty level expenditures. The FCA is 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, and paid to all households regardless of income or actual expenditure. The HHS poverty llevel is a well-accepted, long-used poverty-level calculation that includes food, clothing, shelter, transportation, medical care, etc. See chart in Figure 1 below.

Figure 1: 2004 FCA calculation

Family
size

HHS annual poverty level

FairTax annual
consumption
allowance
(single person)

Annual rebate (single person)

Monthly rebate (single person)

FairTax annual consumption allowance
(married couple)

Annual rebate (married couple)

Monthly rebate (married couple)

1

2

3

4

5

6

7

8

$9,310

$12,490

$15,670

$18,850

$22,030

$25,210

$28,390

$31,570

$9,310

$12,490

$15,670

$18,850

$22,030

$25,210

$28,390

$31,570

$2,141

$2,873

$3,604

$4,336

$5,067

$5,798

$6,530

$7,261

$178

$239

$300

$361

$422

$483

$544

$605

N/A

$18,620

$21,800

$24,980

$28,160

$31,340

$34,520

$37,700

N/A

$4,283

$5,014

$5,745

$6,477

$7,208

$7,940

$8,671

N/A

$357

$418

$479

$540

$601

$662

$723

[ 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 tax law, (2004 income plus FICA/MC):

H.R.25 "The FairTax Act

Not only does every family receive a FCA based on family size, not income, but they will also receive 100% of their paycheck.

Same sh!t, different day.

Ohhh, I get it. Everyone gets an estimated poverty level tax rebate. Cute.

Sooooo 23% Federal, 5% State -- sounds about right. I'm on board.

This puts spending and taxing right out front where everyone can see it, every day. I like that.