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I figured ZERO income tax on the ROI after retirement at age 65. That's less than your 5%, right ?

I alloted the full employee+employer side 15.3% of SS/M tax as the tax paid under the income tax -- since I was allowing for ZERO price drop, and hence ZERO embedded taxes in prices, I counted the entire SS/M tax as falling on the individual. My calculation was based on unmarried filing single, with a current $12K mortgage and $2K property tax deduction.

I know the $35K is right because THESE ARE MY OWN PERSONAL NUMBERS for 2005. The only part that doesn't match my life is the age. Other than that, this IS my FACTUAL situation, not a guess, and not a hypothetical at all.

Eskimo's argument was only on the already-taxed savings, so I didn't address the pre-taxed savings at all. If you'd like to look at the pre-taxed savings, then we can do that, but it would be a different argument. I assumed Eskimo would reject my mixing pre- and already- taxed accounts when his complaint was only about already-taxed savings.

On the already-taxed savings, $2,800 per month could be withdrawn for 25 years, ZERO income tax paid, and the ENTIRE $2,800 spent. That is compared to the much larger savings built up and showing that it lasts 25 years at a withdrawal rate of $4,800 per month. That $4,800 MORE than covers the $2,800 purchases PLUS FairTax.

What example were you looking at ? I skewed my example COMPLETELY in favor of the income tax, but the extra savings prior to retirement completely swamped the higher FairTax when spent. Ten years happens to be a long run of increased savings. If I were within 4 years of retirement, the FairTax would come out worse.

I was simply showing that Eskimo's statement about "anyone over 50 with savings" was based on a bad assumption. Get to over 60 years old, and the "already-taxed savings" argument begins to hold water. My goal with the FairTax is to dispell the myths and identify the REAL problems so solutions can be considered. By my calculations, "over 50" is not a problem, while "over 60" might be.

I figured ZERO income tax on the ROI after retirement at age 65. That's less than your 5%, right?

0% on a number lower that it would be. Golly, how fair of you.

I alloted the full employee+employer side 15.3% of SS/M tax as the tax paid under the income tax

Why would you do that? If you don't increase the person's income by the amount of the employer side of SS/M you are overstating the impact of the payroll tax. (Oh, that's why you did it.) And if you do increase the income by this amount, the total SS/M paid isn't 15.3%. The employee's 7.65% is an inclusive rate, the employer's 7.65% is an exclusive rate. You can't just add them together.

since I was allowing for ZERO price drop, and hence ZERO embedded taxes in prices, I counted the entire SS/M tax as falling on the individual.

You are making assumptions without support. You are assuming that if prices drop (yet another unsupported assumption) that they would be equal to the employer portion of SS/M.

My calculation was based on unmarried filing single, with a current $12K mortgage and $2K property tax deduction.

Your's is not what I would call a typical scenario for people approaching retirement.

I know the $35K is right because THESE ARE MY OWN PERSONAL NUMBERS for 2005. The only part that doesn't match my life is the age. Other than that, this IS my FACTUAL situation, not a guess, and not a hypothetical at all.

You may want to take your taxes to HR Block next time. A person with $125,000 salary putting $15,000 into a 401(k) would have an AGI of $110,000. Minus the $14,000 in itemized deductions and $3,200 in personal exemptions, their taxable income would be $92,800. The income tax on this amount would be $20,490. That's 16.4% of $125,000. The SS/M on $125,000 would be $7,206. Together with the PIT, that's $27,696 - or 22.2% of $125,000.

The only way to get to $35,000 is do what you did and double the SS/M, but then you have to adjust the person's income up to determine what is left to invest - so it cancels itself out. Basically, your example reduces the amount of after-tax money available to invest by ~$7,200 a year.

Eskimo's argument was only on the already-taxed savings, so I didn't address the pre-taxed savings at all.

Your example puts $15,000 a year in pre-tax savings - how can you say you didn't address pretax savings.

Again, your analysis is lacking.