This second part concentrates on what is called the "FairTax Prebate." The gist of the Prebate is a monthly tax rebate on expenses up to the set poverty line, which ultimately means no one will pay taxes on the essential costs of living. That makes sense to me. The Prebate is a highly progressive step toward easing the burden of poverty in the United States of America.

Some have criticized the Prebate because in its barest form it is basically a redistribution of wealth plan. But it's a little more complicated than that. First of all, every American receives a Prebate, but percentage-wise poorer people receive a larger amount.

Here's how the Prebate works (get out the calculator, because there are a lot of numbers in this post):

First, the U.S. Department of Health and Human Services sets the poverty line. According to Federal Register, Vol. 74, No. 14, January 23, 2009, pp. 4199--4201, the poverty line in 2009 for a single person in the 48-state conglomeration is $10,830 yearly, or about $903 per month. What that means is a single individual could conceivably live with the very stark basics if he/she made $10,830 a year, or $903 a month. The person would end up spending every penny just to live, but that's the ugly truth of poverty.

Enter the FairTax. Or more precisely the FairTax Prebate. After HHS sets the poverty line -- in this case we'll use the level for an unmarried person -- said person spends his/her $903 a month on the bare fundamentals of living each month, taxed at the national 23% rate, totaling $208 in taxes; because the bare essentials are not taxed under the FairTax, the U.S. Government sends a Prebate check for $208 to the individual, effectively canceling out the taxes on the purchase of the necessities bought that month and leaving the formerly broke individual with $208 a month, or $2,496 each year, to save or spend as he/she decides is best. Good bye, poverty! Well, not entirely, of course, but it's a huge step in the right direction.

(The reason it's called a "Prebate" is because the tax rebate is actually sent one month in advance, based on HHS's calculations. A "pre-monthly rebate." In my examples it sounds like the Prebate check is sent at the end of the month, but that is just to make it easier to understand. The Prebate will actually be sent at the beginning of each month, or else at the end of one month to compensate for the expenses of the following month.)

The person in this hypothesis needn't make all his/her purchases for the month in one lump, as HHS has already calculated how much he/she will spend. Barring gross errors on HHS's part, or complete negligence on the part of the person in question, the Prebate will put money directly in the pockets of the American people.

Here's where people get confused -- every American citizen receives the Prebate, despite the amount of money he/she makes. At first glance it doesn't sound "fair" that Bill Gates gets the same $208 tax Prebate each month as a homeless man barely hanging on to his job. But look at it a little closer. Would it be fair to give $208 back to an individual who makes $903 per month, but not to an individual who makes $904 per month? Um, I don't think so.

$208 is the amount a single American citizen would pay in taxes every month on his/her necessities. Every single American. Or, every single "single" American, as in unmarried, in this instance. Therefore, to be fair, the government would have to give every unmarried American the same tax Prebate. Even Bill Gates purchases food and the like, the bare necessities, but he and other rich people buy so much more on top of that. So under a "fair tax" system, even the rich get taxes back on the bare necessities, but not, of course, on the innumerable luxuries Gates blows money on every month.

(Besides, $208 is like 0.000000000000000000000000000000000001% of Gates' income anyway, so it isn't like he'll be jumping up and down because he's getting one over on the rest of us Americans. That's in comparison to the other end of the spectrum, when the impoverished would receive a whopping 23% or more of their income back from the government. Not a bad deal, really.)

As another example, let's insert a well-off middle-class individual into the Prebate equation. Let's say an individual who makes $50,000 per year, or about $4,167 per month. Said person will still spend $903 per month on essentials, but on top of that a guesstimated $3,000 in miscellaneous spending, bringing hypothetical monthly expenses to $3,903. Once that is spent, 23% or $898 is sent to the government as taxes. $208 is given back to this unmarried humanoid as a Prebate, which means this person has actually paid $690 in taxes, and only on nonessentials. In other words, the $50,000 per year person gets about 5% of his/her income back in this example. And still keep in mind the 23% of total income an individual at the poverty line will received in Prebate money.

What about a family of five (two parents, three kids) living on $40,000 a year, or $3,334 a month? Money would probably be somewhat tight, considering HHS calculates a family of five must bring in at least $25,790 a year, or $2,150 per month, to live at bare minimum. Let's say this family spends about $3,100 each month, $713 of which is taxes, and leaving $234. Then, along comes the Prebate, which for this family is $494.50. The family now has $728.50 in spending money each month, or $8,742 per year. They have effectively paid $218.50 in taxes, and received $5,932 or 14.83% of total income back in Prebate money.

All said and done, this process is quite simple and it is fair. Now, some might wonder, "If we're giving back taxes for buying things like bread, milk, etc., why don't we just not tax the bread, milk, etc., in the first place?" A logical question, and there is a logical answer: If you allow certain things to go untaxed, there is nothing really to prevent lobbyists from whispering in politicians' ears that the product they represent should not be taxed, either, and that is something the FairTax prevents. In addition, if bread, milk, etc., were not taxed, a single person could conceivably live on that and spend infinitely over the $903 amount without paying a single cent in taxes.

And another thing, if bread, milk, etc., were not taxed because they are necessities, what's to stop an unscrupulous governmental body from proclaiming, say, petroleum, as a "necessity," since most Americans have automobiles that require gas and oil to function. At first it might sound like a good idea, not one American citizen having to pay taxes for gas and oil, but remember the government has to get money somewhere. Ultimately, taxes on other items would go up to compensate, leaving We the People paying the same we were, but lopsidedly giving certain businesses a break and not others.

Again, the FairTax plan as it is prevents that from ever happening, and FairTax proponents want to make sure government has no power to show favoritism to any company over another in any way.

It keeps it simple. And simplicity is something I think we desperately need in American politics these days. The FairTax is simple enough a person could spend a couple of hours looking into his/her total expenses (once the FairTax is implemented) and calculate exactly how much is taxes to the government. It's visible, transparent, and unalterable by politicians -- only by We the People -- all in all a "fair" tax system.

There is but one catch to the Prebate system (you may be thinking, "I knew it!"), and that is the fact every humanoid or humanoid-type family will have to register to receive the Prebate. It'll be a simple task, and one of the only requirements is United States citizenship. It might sound discriminatory against all the "undocumented workers," but this is an American tax system and if people want to benefit from America they ought to become American citizens. In fact, it encourages citizenship.

Under the current income tax system, there is almost more benefit for non-citizens working in the U.S. to stay non-citizens and not report their income to try to avoid taxes. Under the FairTax, specifically the Prebate, there will be more incentive to become an American citizen and receive the Prebate than to try and avoid taxes, which will be increasingly difficult under the FairTax.

Prebate registration is simply meant as an assurance the U.S. Government is not paying back tax money to people who do not meet the requirements to deserve it.

And to end off, I will note that the Prebate is essentially a replacement of current tax refunds as well. There will be no "tax deductions" like we currently have, and I can defiantly see some people being opposed to that. But, if you do the math, it is likely the Prebate, coupled with the full FairTax plan, will put additional money in most everybody's pockets. And I can guarantee it will tremendously help lower income and impoverished families and individuals.