[so_real]

In The FairTax Prebate Explained 2007 it indicates families have to file to receive the prebate, and must renew their application on an annual basis. Also :

Calculation of the prebate
The monthly prebate check is calculated by multiplying the annual poverty level spending published each year by the Department of Health and Human Services times the FairTax rate and dividing by twelve. Poverty level spending represents what it costs families of varying household size and composition to buy their necessities. Figure 2 shows the monthly prebate amount for households of varying composition.

So the opportunities for shenanigans are in the calculation of poverty line spending (which can be audited -- so it is at least public information) and the FairTax rate which everyone else is also tied to (playing with the rate affects everyone equally so no unfair advantage or disadvantage can be introduced that way). There is a slippery slope in setting the poverty line level. But, because the FairTax method is tied to poverty level *spending*, and not poverty level *income*, it is still at least better than we have today.

[Hostage]

The poverty level calculation is a well-seasoned means tested procedure that DHHS has used for decades. It would be very difficult for members of Congress to get into the details of the formulas and data to try and skew the levels so that people can be bought.

And attempting to alter the DHHS computation procedures would also backfire because a calculated increase in the poverty level will lead to larger checks for everyone, rich or poor. These larger checks could cause large outlays from the federal government causing disruption to budget processes.

The Rebate simply says under the FairTax code that:

“There is no federal taxation on any American up to the level of poverty; and then taxation is a flat rate on spending above the poverty level.”

The way to implement the above is to send rebates on taxes already paid and limit the rebates at poverty level spending.

The check production process is already in place and is highly automated as witnessed by the more than 120 million tax rebate checks sent out multiple times in the final year of Bush’s second term.

The Rebate solves the ‘disproportionate burden problem’ that goes back to at least when Davy Crockett was in Congress. Without it the poor and middle class would be spending most of their pay on essentials whereas the rich would spend a smaller percentage of their income on essentials. The Rebate solves that problem completely but it was not technically feasible to implement a Rebate system in pre-1913 America when excise taxes were imposed. Now it is technically feasible and it is also technically feasible to collect federal taxes at the retail level.

So the bottomline is that America is now ready for a FairTax code.

http://www.fairtax.org/site/PageServer?pagename=about_faq