How does that rebate work? If I'm poor, I file a form stating my income and records of what I paid in sales tax and they send me a check?
I'm learning here.
apparantly everyone gets a rebate check from the government: rich or poor. Doesn't sound like such a good idea to me
Everybody gets a rebate check for the same dollar amount: you, me, and Bill Gates. It's enough to cover the taxes paid on purchases up to the poverty level or thereabouts. This turns the FairTax into a progressive system; as you spend more, the rebate cancels less of your taxes percentage-wise, so your effective rate increases.
"How does that rebate work? If I'm poor, I file a form stating my income and records of what I paid in sales tax and they send me a check?"
The rebate has nothing to do with income level, or spending. It depends only on family size (as determined by verifiable SSNs). It is a very simple and clean way to ensure that the system is not regressive. Those living at or below the poverty level would see a 15 - 30% increase in purchasing power.
No federal sales tax up to the poverty level means progressivity like today's tax system. Furthermore, to ensure that no American pays tax on necessities, the FairTax plan provides a prepaid, monthly rebate for every registered household to cover the consumption tax spent on necessities up to the federal poverty level. This, along with several other features, is how the FairTax completely untaxes the poor, lowers the tax burden on most, while making the overall rate progressive. However, the FairTax is progressive based on lifestyle/spending choices, rather than simply punishing those taxpayers who are successful. Do you see how much freer life is with the FairTax instead of the income tax?