The prebate is going to everyone, it does not solve the relative unequal treatment of "old" accumulated wealth, as compared with "new" earned wealth.
I'll change my statement to include prebates to make this clear.
Not true for retirees, persons on a fixed (eg pension) income, or anyone with accumulated wealth. Those people will have exactly the same amount they have now plus a prebate, it is their children and grandchildren who will suddenly have 25% more take-home money plus the same prebate. Does this sound Fair?
You're not creating new money i.e. nothing is being printed that would otherwise be printed. You are putting 25% more take-home pay allegedly in the hands of every wage earner in America, instead of giving it to the government. I would imagine money supply will have to be increased.
If your old wealth is invested in munis ala Heinz-Kerry you will pay more because you will be taxed on the spending. If invested in a money market you will pay less because you will no longer be taxed on the interest. If invested in stocks, you will be taxed less, because you will not be taxed on the dividends or the sale.
It actually evens things out.
Does this sound Fair?
Will most seniors be better off? I think so -- as they would if we were to simplify the tax code via other means. Anyway, the status quo is anything but fair so, yes, the FairTax is more fair than the status quo.
You are putting 25% more take-home pay allegedly in the hands of every wage earner in America, instead of giving it to the government.
And the government gets the exact same amount of money back when it is spent, according to the plan. There is no reason to increase the money supply.