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Rebate or prebate, it makes no difference because the amount returned to the taxpayer gets spent again,

And since the rebate or prebate gets spent more than once it is no mystery that spending is more than earnings,

The $6,297 is an accumulation of $524.75 per month of rebate/prebate that IS SPENT AGAIN.

Either the $524.75 is credited up front or rebated the month after, it makes no difference as to how earnings are less than total spending, because the spending of the rebate/prebate is recycled.

Based on $40,000 earnings the monthly breakdown for when the rebate is paid the next month

Month -— Gross pay -— Rebate Credit -— NRST Net Paid
1 .. -— $3,333,33 -— $0.00 ....... -— $766.66 - $524.75
2 .. -— $3,333,33 -— $542.75 ..... -— $887.36 - $524.75
3 .. -— $3,333,33 -— $542.75 ..... -— $887.36 - $524.75
: .. -— ... : ... -— ..... : ..... -— ....... : .......
: .. -— ... : ... -— ..... : ..... -— ....... : .......
: .. -— ... : ... -— ..... : ..... -— ....... : .......
12 .. -— $3,333,33 -— $542.75 ..... -— $887.36 - $524.75
13 .. -— $3,333,33 -— $542.75 ..... -— $887.36 - $524.75

So it is clear that the Rebate of $524.75 is recycled from the previous month and credited to the current month where it gets SPENT AGAIN.

From months 2 through 13 that span 1 year the earnings are $40,000 and the Total Spending is $46,297 because the monthly rebate gets recycled and SPENT AGAIN.

For the other simple case where the federal government ‘prebates’ the family, the breakdown is similar and the result is identical:

Month -— Gross pay -— Rebate Credit -— NRST Net Paid
1 .. -— $3,333,33 -— $542.75*..... -— $766.66 - $524.75
2 .. -— $3,333,33 -— $542.75 ..... -— $887.36 - $524.75
3 .. -— $3,333,33 -— $542.75 ..... -— $887.36 - $524.75
: .. -— ... : ... -— ..... : ..... -— ....... : .......
: .. -— ... : ... -— ..... : ..... -— ....... : .......
: .. -— ... : ... -— ..... : ..... -— ....... : .......
12 .. -— $3,333,33 -— $542.75 ..... -— $887.36 - $524.75

* Rebate for first month only is paid ahead or ‘prebated’

As for your attempt to say that this family will pay more in taxes the answer is yes but that’s because they get to spend more. But if you equalize consumption levels, you will see that the Income tax is a much higher rate.

Under the FairTax the family of this example spends $46,297 and pays $10,648.31 plus $1,102.30 in local sales tax assuming a 5% rate. So their net consumption is the total they spend minus the taxes or $34,546.39.

Under the Income tax the family of this example spends $35,430 and pays $843.57 in local sales taxes but they are paying all the present federal embedded hidden taxes in pricing at an average 20% which amounts to $7,086. So their consumption is $27,500.42.

Now you can go to the calculator and input what you want for federal embedded hidden taxes that exist under the Income tax today. You can input 20% which is the average for all businesses and assumes the employees are not returned their payroll tax but keep the same take home pay or you can input any percentage you wish which indicates how much the employer is willing to give the employees extra. Some employers may do this, others may not in order to remain competitive.

In any case, as long as the percentage of embedded taxes is above zero, the family is able to consume or buy more under the FairTax.

Whatever is input the consumption is always the same under the FairTax for this family, it is $34,546.39.

For only a 10% decrease is the pre-tax price of goods and services, the hidden taxes are $3,543, and the total consumption (equivalently the current purchasing power) is $31,043.42 under the Income tax. That is less that under the FairTax.

For only a 5% decrease is the pre-tax price of goods and services, the hidden taxes are $1,771.50, and the total consumption (equivalently the current purchasing power) is $32,814.92 under the Income tax. That is still less that under the FairTax.

The effective tax rate is measured according to purchasing power and purchasing power always favors taxpayers under the FairTax. It matters not to the family what the percentage is, it matters how much they can buy with what they have on hand. Again under the FairTax the purchasing power is always more for taxpayers as long as pre-tax prices are decreased by any percentage above zero.

For an unrealistic 1% decrease is the pre-tax price of goods and services, the hidden taxes are $354.30, and the total consumption (equivalently the current purchasing power) is $34,232.12 under the Income tax. That is still less that under the FairTax.

And in order to believe this, you have to believe that American free markets are going to force retailers to lower their prices because they no longer have any federal taxes or costs of complying with the tax code. And they also will see price reductions from their suppliers and services and so on throughout the supply and production chains.

But in any case, whether employers give employees a raise in their take-home or not, there is going to be economic growth of at least 10% immediately in the first year and a continuing economic growth in each year following. Whether the employee has more money to spend, or the same but more purchasing power, or whether the employer keeps the tax windfall and starts to expand business, it will be a growth mode. More money will get spent in every case.