Slowhand luke is worried that this is income redistribution.
Not at All.
IT really is a tax credit of your own money, prefunded at the beginning of the month with a Prebate.
The concept is to give you or your family a credit up to the poverty line of spending that refunds you the tax you paid on those purchases up to that level. No receipts to keep, no complicated IRS forms, jsut a simple form with family names and valid Social Security numbers to determine family size and size of your prebate. Maid or millionaire you recieve the same sized prebate. That's Fair and simpler to administer.
A Family of 4 has a 2005 povertyline level on "necessities" of $25,660 the tax on that spending is $5,902. In 95% of the cases, the Federal Government is giving that family a credti of their own money to be spent. $492/m to cover the National Sales tax on all purchases of new products and services for that month. The family at this level will have a net efeective rate of ZERO.
The Best introduction and overview is the read through the 40+ FAQs at; http://www.fairtaxvolunteer.org/smart/faq.html
It is a payment of money that you have not yet spent and may never spend. That's pretty much fits the definition of redistribution.
This just provides a policy lever for redistribution to the politicians. They'll just jack up the prebate to increase the size of the population getting more in prebate than they spend in taxes.
You might have the best of intentions, but this is replacing one gun with another in the hands of an idiot child (politicians as a group).
So, I'm in the camp of those who think 'better the devil I know'.
Now, if you want to go to a no-exemption sales tax, I'm on board. Or, if you want to exempt food & clothes for all, I'm ok with that. Neither requires me to register with the government to let them know where to send the 'prebate. There's no income redistribution in the first, little in the second suggestion.
And, the provision to pay SocSec out of the FairTax proceeds definitely makes this an income redistribution/welfare proposal. With payouts totally unlinked from pay-in, what else can it be? This is a really big gun to put in the hands of those idiot children, the politicians.
Real individual SocSec accounts are the only way to go. Unfortunately, that puts responsibility on the individual, and takes it (and the associated power) away from the Government, so it will be a hard fight. The FairTax goes the other way, the wrong way.