“I’d agree, except for the concept of a “Prebate”, which is supposed to be a minimum income available to low-income people.”
Nope, the prebate is a refund for the taxes paid at a borderline poverty level of spending. That makes the Fair Tax less regressive (penalizing to lower income folk) than any type of flat tax. It’s a means of not having to categorize various things as “not taxable” like food. Is candy food or not? Is soda? Etc. Everyone who cares to, regardless of income level, can receive the prebate.
I don’t particularly love it either, but no purely regressive tax is going to fly.
Absolutely false. A regressive tax is one where the average tax rate falls as income rises. If you plot taxes on the vertical axis and income on the horizontal axis, a regressive tax must have a positive intercept on the vertical axis. (The slope of a line from the origin to a point on the tax function measures the average tax rate.) A progressive tax rate must have an intercept on the horizontal axis. A true flat tax like I want to see, with no prebate, has the linear tax function that passes through the origin with a slope of .17 using Friedman's number, which means it has a constant average tax rate and, hence, cannot be regressive or progressive.
My problem with the prebate is that Congress would get to decide how it is determined and I don't trust them with such a decision. It will become political, just like it is now. Obozo bitches that the rich fat cats take advantage of tax loop holes. Really? Who the hell does he think wrote the tax code? Congress put those holes there with full knowledge of the political gains to be made for themselves by their existence. No, set a flat tax, teach the misinformed it's not regressive, and mail your tax form in on a postcard.