You comments are both understood and appreciated. I haven't any doubt that that will rightfully be some of the discussion when the bill is marked up in Congress. It has no doubt already been discussed within the FairTax organization but I'm not privy to their thinking.
The revenue-neutral requirement does not account for a deficit or lack thereof but merely attempts to provide the same level of funding as at present - it is not a spending or deficit reduction measure.
Thanks Pigdog.
I am not privy to the strategy within the AFT either. I am sure they expect there to be some wrangling, and if the deferred-accounts windfall gets bargained away, I won't cry about it.
I said I had several issues that I am not entirely happy with in the FairTax as written.
Second issue: The Prebate.
The Prebate structure is somewhat at odds with the basic assumptions of the FairTax. On the one hand, it's purpose is to make sure nobody pays the FairTax up to poverty-line spending. On the other, a basic assumption of the FairTax is that prices will fall so that adding the FairTax back on will restore prices to where they are now.
So why would anyone need a Prebate ?
If prices fall, then nobody's purchasing power has been hurt. The only purpose of the Prebate in that case is to create "Progressivity", or to "help the poor". Another way to describe a "progressive" tax system is to say there is a "success" tax to fund welfare programs.
I understand the ideological debate of limited government and income redistribution is a separate issue from tax reform. And I applaud the FairTax as a valuable first step in at least making people aware of the cost of government. But ... the Prebate is effectively a welfare program where those at the poverty line will realize an improvement in their standard of living at no cost to themselves.
The AFT panders to the liberals by saying "we will completely untax the poor". Why ? When something is "free" to a person, that person does not value it, and they are more likely to waste it. Government should not be a "free" good.
The person living at poverty level will have no incentive to fight against a rise in the FairTax rate. Because it would actually mean a higher Prebate check for them, and if they are not spending all their income at retail, it means an increase in the tax rate actually benefits them.
Maybe this is a necessary evil to bring in support from liberals, but I think the Prebate is a bad idea.