One of the students in the home school class we visited last week presented us with the following question: Does the pre-bate change or allow for 3 adults and 2 kids in the same household? This generated another question, this time from the teacher: What would happen if my parents moved in with us? That would be 4 adults and 2 kids. Do you know how this would work?
Well, I consulted my trusty white papers and also checked these questions out in the actual bill (HR25/S1025). Here are the answers:
QUALIFICATIONS
All qualified families, consisting of all family members who share a common residence, are entitled to receive the monthly prebate. Family members include an individual and his or her spouse, children and grandchildren, parents, and grandparents.
Children living away from home are considered family members if they are registered as a student for at least five months out of the year and receive at least 50% support from the family unit.
Children of divorced parents are considered to be family members of the custodial parent. Incarcerated individuals are not eligible to be members of a qualified family.
In order for a person to be counted as a member of the family, a person must have a valid Social Security number and be a lawful resident of the United States.
The application/registration form that families who choose to receive the prebate must file is simple and straightforward. Those choosing not to register will not receive a prebate.
CALCULATION OF THE PREBATE
The monthly prebate check is calculated by multiplying the annual poverty level spending published each year by the Department of Health and Human Services times the FairTax rate and dividing by twelve.
There is a chart in the white paper and also in the FairTax bill showing the prebate schedule for 2007. You can check it out and figure exactly what your rebate will be under the FairTax. These payments allow for additional amounts for a 2-adult household, which eliminates the marriage penalty. I am assuming that after that adjustment, additional adults in the family unit would be considered the same as a child as far as the amounts of the rebate.
ADMINISTRATION
The prebate is sent out by the Social Security Administration around the 1st day of each month. Prebate payments can only be made to persons 18 years or older; however, the prebate payment can be divided evenly among those persons as designated on the registration form.
So lets figure the prebates on the examples given in the questions.
3 adults and 2 kids in a household: (Counted on the chart as 1 couple, 3 kids)
The monthly rebate would be $554.
4 adults and 2 kids in a household: (Counted on the chart as 1 couple, 4 kids)
The monthly rebate would be $617.
I have a link on my blog to the FairTax bill, the plain English summary, if you wish to check out the chart or read further on this subject. It is in Chapter 3.
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3 comments:
I have an idea that might fix the problem of multiple families in a single household. It might be worth having a registered appartment that would qualify as another household. This could help solve the problem with parents and adult children. I could be wrong but I think it would work.
Bobbie,
I'm staring at the 2007 chart on the prebate schedule in the AFFT White paper, and I can't find your numbers. The chart I have says: 1 couple plus 4 kids = $658, not $617; 1 couple and 3 kids = $591, not $554. I wonder if perhaps you are looking at the 2006 schedule?? Or have I got the wrong stuff?
Not sure I understand John's solution, but something needs to be done. Here are some more points to ponder. First, do you think a PO Box qualifies as an address? I have a couple of reasons for asking. What about the homeless? Won't they get the prebate, and could they simply rent a PO box to receive the monthly check? Could their address on the application be "Under the 14th street bridge, PO Box 747, Wash, DC"
As for grandmother and grandfather moving in with their adult children, it's going to cost them over $3000 in lost prebate cash annually. Living apart from the kids, they would get $4692 annually, yet when they move in with the kids, they only add $1608 to the family prebate amount. Now, I know us old folks don't cheat (?), but maybe some might simply continue to get their prebate at their old PO box (assuming that is OK), and pocket the $3000? And you may have noticed a very strange sentence at the end of chapter 3, where it says that changing the registration form (when they move in) is not mandatory?? So, are the old folks not guilty of a crime?
Another point to ponder is the prebate status of 100 orphans in an orphan facility. Does the orphanage get the prebate?? Or are orphans left out of the prebate plan altogether?
To some, the prebate sounds like a great idea. However, the states have been using sales taxes forever, and they choose to use exemptions for essentials rather than a prebate. What do they know?
Frankly, I think the $600 billion annual cash grant entitlement is a very bad idea. The federal budget can't stand any more entitlements, and the "one size fits all" (except for Alaska and Hawaii) doesn't reflect the real poverty level in the different regions. I also think the opportunity for fraud is greater than that experienced with a plan that exempts essentials.
Stay tuned.
There are a few problems with exemptions:
1)exemptions can be changed (the reason our current tax code is so complicated)
2)unbalanced benifit for different income groups(for a party,you buy hamburgers for 15, and I buy lobster for 50)
3)gives businesses selling exempt items an unfair advantage.
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