With respect to double taxing Grandma and Grandpa, I ask you to consider the following:
1. They are doubly taxed now to the extent that they bear any of the economic incidence of entity level taxation; something that is impossible to predict or quantify. Grandma and Grandpa pay it in the form of higher prices and reduced nominal return on investments.
2. The Fair Tax repeals the RMD rules for qualified plans, which are designed to trigger a taxable event whether Grandma or Grandpa needs the money.
3. The net present value of the Medicare Part D entitlement is estimated at $10 trillion. Perhaps Grandma and Grandpa should pay for that instead of our children and grandchildren? The Bush inspired expansion of the welfare state raises genuine generational equity issues. I would prefer to repeal Medicare Part D, but failng that, I’m not sure it is inappropriate to tax those who benefit from the program.
4. If Grandma and Grandpa are truly wealthy, the Fair Tax repeals the estate and gift tax; greatly simplifying their estate planning and reducing their lifetime tax burden.