February 25, 2014
Tuesday AM

The FT’s Prebate is a WELFARE check that leaves many dependent upon the govt for a large portion of their monthly income – a very bad idea. The Prebate is explained as being needed to insure that the poor pay no FT, merely assuming that we all agree with that goal. Further analysis exposes that the Prebate goes much further – it gives the poor a large FT PROFIT.

The Prebate gives every family a monthly check purportedly to cover the FT they would pay on “poverty level purchases” as defined by the US HHS Dept.’s Poverty Guidelines and makes “adjustments” to them. The Prebate next “assumes” that EVERY family of each size spend a certain amount of dollars (For 2014; $11,670/adult, $4,060/child) which is then multiplied by 23% (the tax-INCLUSIVE rate) to yield the Prebate that will reimburse all the of the FT ($2,684/adult, $934/child) that is THEORETICALLY paid.

To illustrate, assume there is a family of 5; Husband, Wife, 2 kids, and the Wife’s Sister lives with them. They would be “assumed” to spend a total of $43,130 ($11,670 x 3, plus $4,060 x 2). Their 2014 Prebate would be $9,920 ($43,130 x 23%, the “tax-inclusive” FT rate). The $9,920 Prebate is calculated to pay back 100% of the FT THEORETICALLY paid by the family, but as shown below it greatly OVERPAYS the amount of FT ACTUALLY paid by the family.

Point 1. The FT corrects for the “Marriage Penalty”.

The problem is that there IS NO “Marriage Penalty” in the underlying HHS Guidelines – they were developed as impervious to the age (or the marital status) of the person. They provide $11,670 in spending for the 1st PERSON in the household and $4,060 for the 2nd PERSON (the 1st PERSON gets more to pay the rent) – it does not matter whether the person is an adult or a child or whether the adults are married or not. What the Prebate does is “make believe” that the HHS Guidelines say “Adult” & “Child” and then is more generous to marrieds – the Prebate is generous in giving away more money, YOURS.

RESULT: The Prebate assumes this family spends $7,610 MORE and overpays them by $1,750.

Point 2. The Prebate’s more generously defines “family”.

FT’s more-limited (than the HHS guidelines’) definition of “Family” allows for more FT “families” in a single physical household than the underlying HHS Guidelines would allow. A FT “family” includes only lineal ancestors/descendants (plus adopted). Thus, the Wife’s Sister would be treated as a separate family under FT, and thus as an adult (this would NOT occur if the HHS Guidelines were followed).

RESULT: The Prebate assumes this family pays $7,610 MORE and overpays them by $1,750.

Point 3. The Prebate “assumes” that ALL spend AT the poverty limit.

If the family ACTUALLY spends LESS than the maximum amount a family can spend and still be at the HHS Guidelines’ limit, they will be overpaid. This family is “assumed” to spend $43,130.

RESULT: If they ACTUALLY spend $3,000 less than the limit, the Prebate will OVERPAY them by $690

RESULT: For Points 1-3, The Prebate assumes $18,220 MORE spending and overpays by $4,190.

Point 4. The Prebate OVERPAYS for USED goods.

If the family buys some goods USED (and can prove the seller paid FT) they will not have to pay FT. Yet the Prebate “makes believe” that they DID pay FT.

RESULT: If the family bought $5,000 of USED goods, the Prebate would overpay them by $1,150

Point 5. The Prebate OVERPAYS for Black Market purchases.

If the family buys some goods on the Black Market, they will pay no FT. The FT “makes believe” that all of the money is spent legally so that full FT is paid.

RESULT: If the family spends $5,000 in the Black Market, the Prebate overpays them by $1,150.

Point 6. The Prebate OVERPAYS for In-Kind Welfare

If the family is on Welfare, a substantial portion of their support will be paid IN-KIND (e.g., Medicaid, Housing Assistance). The poor will NOT receive cash for these items and pay FT – WE DO. Thus, the FT “makes believe” that the poor actually paid the FT and repays THEM for FT WE paid.

RESULT: If in-kind welfare is $6,000, the Prebate overpays by $1,380.

RESULT: For Points 4-6, Prebate assumes FT paid on $16,000 of purchases and overpays $3,680.

RESULT: For Points 1-3, Prebate assumes $18,220 MORE spending and overpays by $4,190.

RESULT: Grand Total overpaid Prebate; Points 1-6 = $7,870 (i.e. $9,920 minus $2,050, total actual amount of FT paid on actual spending on which FT is paid in this illustration ($8,910). PLUS, the poor get free SS/Medicare.

Received February , 2014 - Published February 25, 2014

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