If the rate was set to the correct amount, no prebate should even be necessary.

Fair tax would be completely laughable except that it hijacks the attentions of good but unfocused men like Fulton Sheen, changing him from a not-bad limited government advocate into just another irrelevant Fair Tax crank, leading a bunch of other irrelevant cranks on a pointless crusade.

1. since the tax is only applied to NEW products, if you choose to purchase used cars, etc., you won't have to pay any tax (since that would be double taxation; the way Dems and Repubs do it now).

2. any money you give away is tax exempt. You don't have to worry about who the gov't approves of - if you approve, then it's a tax exempt donation.

3. any money that you put into savings is tax exempt. And you may withdraw and spend it without penalty - except of course the sales tax you pay on NEW purchases.

4. It would allow you to keep all that you earn, effectively giving you a pay raise, without costing your employer anything additional.

5. Prices would drop, as 40% of the purchase price of any item is tax (approximately). With market forces operating freely, prices would drop - but as noted above, wages would go up.

6. It should eliminate most of the black market. However, this is the only area where problems exist. The underground economy of earnings would effectively be eliminated, since there would be no withholding tax. Tax on purchases however could make a black market appear to be more appealing. The truth is, we already see this happening now. So, in spite of the black market on purchases, the elimination of it on earnings balances it out, I believe.

What I said, 3 times now, is that IF there was NO INCOME TAXES there would be NO WITHHOLDING. IF THERE WAS NO WITHHOLDING, my boss would have two choices: 1) pay me what he was paying for my withholding (he's already paying it "for me," withholding it from my check. It's part of his payroll), or 2) continue to pay me my TAKE HOME PAY, and save the $30,000 dollars that HE WAS PAYING "for me" out of my salary. That's called WITHHOLDING.

Do you have a job? Do you know what Withholding is? Do you understand what GROSS vs. NET income is?