A seldom mentioned benefit of the FairTax is that it would indirectly punish illegal aliens, by taxing them at 23% more than the US citizens most likely to compete with them for jobs.
Critics of the FairTax often try to misrepresent the FairTax as a 23% tax on everyone. That is NOT true. In fact, the only people in the USA who would pay the full 23% FairTax base rate would be illegal aliens.
You see, under the FairTax, every US citizen family would receive a “Prebate” check every month, equal to the amount of FairTax that would be paid on spending up to the poverty level, in one month. Illegal aliens would not receive that check. This means that those citizens living at or near the poverty level would pay an effective FairTax rate of approximately zero percent (0%), while illegal aliens, who don’t receive the “Prebate” check, but who compete for the same jobs, would pay the full 23% base rate on all of their new retail purchases. And don’t think that they can just buy everything used, either. That’s because you can’t buy used rent, used food, used electricity, used gas, used bus fare, etc. Most monthly purchases would be taxable.
Do you see where this is leading?
The result is that US citizens and those aliens who are in the USA legally and qualified to hold a job here, would have a 23% tax advantage over illegals. Illegals, who have never paid a penny of US income tax would suddenly find themselves paying at a rate even higher than Bill Gates. (OK. If you rounded to less than 8 or 9 decimal places, then it would look like Gates pays the full 23%, too.) Even billionaires, who spend outrageous amounts of money, would pay only 22.9(followed by a bunch more nines)%, due to the “Prebate.” Only illegal aliens, who don’t get the “Prebate” check would pay the full 23% FairTax base rate. (FYI, most citizens would pay less than 11%, after “Prebate”.)
Illegal aliens, who typically work at a few percent below minimum wage, would find themselves having to make 10-15% more than minimum wage, just to maintain their current lifestyle. If illegals can no longer afford to work for less than minimum wage, then why would employers hire an illegal alien for more than minimum wage, when he could hire a US citizen for the same pay and not have to worry about being fined?
The FairTax would turn off the illegal alien magnet and go a long way toward starting self-deportation of illegal aliens.Follow us on social media