To preclude any citizen from paying the FairTax on the basic necessities of life, a Rebate check is sent (in advance) each month. Also, called a "Pre-bate" check.

The amount of the Rebate is determined by Family size (not income) and is calculated by multiplying the annual Poverty Level (as established by the U.S. Department of Health & Human Services) times 23%, then dividing by 12 to determine the monthly amount of the "Pre-bate" check.

The Rebate for a family of four(4) for year 2003 would be $465/mo, paid in advance each month. [See chart below.]

Thus, the family in that example would in effect pay no FairTax on purchases up to $24,240 for the year. (Note: The FairTax applies only to New Goods and Services. It does not apply to Used Goods, or to Education costs.)

If the family of four purchased $48,480 for the year, the amount they would have paid in FairTax (net of the Rebate) would have been $5,575, or 11.5% of the total expenditures for taxable (New) Goods & Services.

2003 Family Consumption Allowance & Rebate

Family Size	[1] HHS Annual Poverty Level	FairTax Annual Allowance (Single Person)	Annual Rebate (Single Person)	Monthly Rebate (Single Person)	FairTax Annual Allowance (Married Couple)	Annual Rebate (Married Couple)	Monthly Rebate (Married Couple)
One	$ 8,980	$ 8,980	$ 2,065	$ 172	n.a.	n.a.	n.a.
Two	$ 12,120	$ 12,120	$ 2,788	$ 232	$ 17,960	$ 4,131	$ 344
Three	$ 15,260	$ 15,260	$ 3,510	$ 293	$ 21,100	$ 4,853	$ 404
Four	$ 18,400	$ 18,400	$ 4,232	$ 353	$ 24,240	$ 5,575	$ 465
Five	$ 21,540	$ 21,540	$ 4,954	$ 413	$ 27,380	$ 6,297	$ 525
Six	$ 24,680	$ 24,680	$ 5,676	$ 473	$ 30,520	$ 7,020	$ 585
Seven	$ 27,820	$ 27,820	$ 6,399	$ 533	$ 33,660	$ 7,742	$ 645
Eight	$ 30,960	$ 30,960	$ 7,121	$ 593	$ 36,800	$ 8,464	$ 705

[1] SOURCE: Fed. Reg., Vol. 68, No. 26, Feb 07, 2003, pp. 6456-6458.

Distribution of the Rebate will be made by the Social Security Administration which is well equipped to handle the task, having the experience of distributing monthly Social Security payments for many years.

It is anticipated that the majority of the Rebates will be distributed via electronic funds transfer from the Treasury in D.C. to the individual's bank account as are most Social Security payments today.