Fair Tax Clarification: Does Not Change Government Programs
Some people have misunderstood the Fair Tax to take it to mean that government programs like Social Security, MediCare, or MediCaid because the taxes that are collected in payroll checks will no longer exist. This is not the case at all. The Fair Tax does not change any government program or eliminate any government program. The Fair Tax does change the way that taxes are collected for the programs.
Social Security, MediCare, or MediCaid programs would not change their coverage. In fact these programs would be more stable and have greater longevity under the Fair Tax as their is no upper income level for which taxes are no longer collected like the Social Security Tax. The taxes instead are accounted for in the calculation of the Fair Tax rate of 23%. With the increased economic growth that has been accounted for in a recent Macroeconomic study of the Fair Tax, the increased growth rate of the economy in ensuing years from the replacement of the income tax with the Social Security Tax would increase revenues to the government to stave off the inevitable bankruptcy of these programs.
In addition, people who receive assistance from these programs will benefit more under the Fair Tax as they will no longer be double taxed in the instance of Social Security or be forced to pay any taxes because spending up to the poverty level would be returned via the monthly prebate to cover the costs of the taxes on items of necessity. Only spending over the poverty level would be taxed.
The Fair Tax does not change any government programs. The only thing the Fair Tax changes is the means by which the tax is collected.
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