How is it going to be less prone to fraud?
Why not just not tax the things the prebates are supposedly going to refund taxes for, and eliminate all that?
I'd rather have a flat tax than something prone to smoke and mirrors.
Prebate “checks” will be electronic direct deposits, similar to federal, state and local retirement checks, SS checks and the like. Done by computer-to-computer communication.
I’ll grant that there is the opportunity for FRaud inherent in ALL government programs. Witness the continuing EBT, disability, unemployment, etc. etc. FRaud we are daily told about. HST, the potential for FRaud is not, IMHO, a serious enough problem to be a FairTax show-stopper. In any event, there are provisions in the law to “handle,” and ultimately, imprison, those who try to cheat the system.
With respect to employees, it will not take 100,000 feds (the rough IRS body count today) to operate the new agency. The IRS WILL BE ABOLISHED and a new agency created to monitor the states tax collection efforts after FairTax is implemented. If the number of IRS types decreases by 50-75%, that is a hellofasavings!
When the FairTax proposal was being written, I argued (I was there) for the lower rate/no prebate you speak of. I lost the argument (I was not the only one arguing for a “no prebate plan, BTW). HST, the arguments for including the prebate were persuasive, and the prebate is in the legislation.
The architects the FairTax believe that including a prebate to pay for the necessities of life would accomplish three essential purposes: (1) the prebate would help defuse the “regressive” argument, because the it effectively makes the FairTax “progressive;” (2) the prebate would increase the appeal of the FairTax to low and middle income taxpayers who were used to paying lower tax rates, and; (3) the prebate would obviate the “requirement” to have certain classes of goods (food, rent, medicine, etc. etc.) untaxed. The prebate totally eliminated the argument that if certain goods were not taxed, then other goods should not be taxed. (Under FairTax, ALL new retail goods and services are taxed; there are no exemptions and loopholes. The idea here is to eliminate the “rent seeking” lobbyists industry.)
Finally, the flat tax is still an income tax. The Flat tax does not abolish the IRS; the FairTax does. The flat tax does not release the American citizen FRom the slavery of an income tax; the FairTax does.
In fact, I can make a strong argument that under a flat income tax, the IRS will become even more intrusive, abusive, intolerant and disrespective of the Constitution than it is now. I’ll save that discussion for another thread.
Fundamentally, what we have here is an argument for FReedom. We will never be a truly FRee people so long as we have an income tax and an IRS!
I rest my case.