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 2004 would be $479/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 $24,980 for the year. (Note: The FairTax applies only to New Goods and Services. It does not apply to Used Goods, or to Education costs. So, a family of limited income could stretch its purchasing power even further by buying a Used Car, for example, rather than a New Car.)

If the family of four purchased $49,960 for the year, the amount they would have paid in FairTax (net of the Rebate) would have been $5,745, or 11.5% of the total expenditures for taxable (New) Goods & Services.

2004 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	$ 9,310	$ 9,310	$ 2,141	$ 178	n.a.	n.a.	n.a.
Two	$ 12,490	$ 12,490	$ 2,873	$ 239	$ 18,620	$ 4,283	$ 357
Three	$ 15,670	$ 15,670	$ 3,604	$ 300	$ 21,800	$ 5,014	$ 418
Four	$ 18,850	$ 18,850	$ 4,336	$ 361	$ 24,980	$ 5,745	$ 479
Five	$ 22,030	$ 22,030	$ 5,067	$ 422	$ 28,160	$ 6,477	$ 540
Six	$ 25,210	$ 25,210	$ 5,798	$ 483	$ 31,340	$ 7,208	$ 601
Seven	$ 28,390	$ 28,390	$ 6,530	$ 544	$ 34,520	$ 7,940	$ 662
Eight	$ 31,570	$ 31,570	$ 7,261	$ 605	$ 37,700	$ 8,671	$ 723

[1] Source: Fed. Reg., Vol. 69, No. 30, Feb 13, 2004, pp. 7336 - 7338

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.