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THE FAIRTAX BOOK Page 84, 85

The folks who wrote the FairTax Plan knew that burdening the poor with a 23 percent retail sales tax would doom the plan from the outset. And since the FairTax was designed from scratch – as opposed to the current hodgepodge of rules and regulations we call “the income tax”- its creators ensured that no one should ever have to pay the sales tax on the basic necessities of life. That’s why the prebate – the monthly check covering taxes on all basic household necessities – was invented.
The size of the monthly prebate payment will be based on the government’s published poverty levels for various-sized households. The number is updated every year to keep up with inflation, so the work of calculating the size of the prebate is already done. Here’s an example of how the prebate payments would work in 2006.
Let’s say your household consists of a married couple with two children. The FairTax Act sets forth a formula for computing the poverty level, based on government figures, which negates any marriage penalty. Under the FairTax Act, in 2006 your household would be granted an annual consumption allowance of $26,400. This is the amount the government estimates you would spend during that one year to buy the basic necessities of life for your family. The sales tax on this amount would equal $6,072. The government would rebate this amount to you in twelve equal monthly installments of just under $506.
Now, it’s clear that low-income Americans will be better off, much better off, under the FairTax Plan. They would have (continued on page 86)

(Please get a copy and read the rest of this book – The FairTax Book)