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 2002 would be $458/mo, paid in advance each month. [See chart below.]

Thus, the family in that example would in effect pay no FairTax on purchases up up to $23,880 for the year. [Note: The FairTax applies only to New Goods and Services. It does not apply to Used Goods.]

If the family of four purchased $47,760 for the year, the amount they would have paid in FairTax (net of the Rebate) would have been $5,492, or 11.5% of the total expenditures for taxable Goods & Services.

2002 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	$   8,860	$   8,860	$ 2,038	$ 170	n.a.	n.a.	n.a.
Two	$ 11,940	$ 11,940	$ 2,746	$ 229	$ 17,720	$ 4,076	$ 340
Three	$ 15,020	$ 15,020	$ 3,455	$ 288	$ 20,800	$ 4,784	$ 399
Four	$ 18,100	$ 18,100	$ 4,163	$ 347	$ 23,880	$ 5,492	$ 458
Five	$ 21,180	$ 21,180	$ 4,871	$ 406	$ 26,960	$ 6,201	$ 517
Six	$ 24,260	$ 24,260	$ 5,580	$ 465	$ 30,040	$ 6,909	$ 576
Seven	$ 27,340	$ 27,340	$ 6,288	$ 524	$ 33,120	$ 7,618	$ 635
Eight	$ 30,420	$ 30,420	$ 6,997	$ 583	$ 36,200	$ 8,326	$ 694

[1] Federal Register, Vol. 67, No. 31, Feb 14, 2002, pp. 6931-6933.

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.