Have you really thought this through? Because it's not just the farmer, it's hundreds of millions of Americans with any savings or investments as of the date the new system is implemented.
As of that date and forevermore they're going to have to keep those funds separate from all other income, including income from those investments.
And every purchase made with those funds will have to be documented to the taxing authorities along with proof that no post tax funds were used.
For people with after-tax retirement accounts this will be necessary for the rest of their lives.
What size bureaucracy do you think will be necessary to verify all these purchases and distribute the refunds?
A brilliant scheme that can't be implemented in the real world isn't brilluant.
And transitioning/detransitioning every 7 years is the opposite of brilliant.
The farmer example or the saver are today purchasing products with the taxes embedded. Your argument therefore doesn’t follow unless you advocate that taxed savings shouldn’t be taxed again, but yet they are taxed again as things stand today.
Every product on the shelf and every service rendered come with embedded taxes that we don’t see and which are passed on to us. Whether we use taxed savings or untaxed income, we as consumers are paying hidden embedded taxes passed to us.
After the FairTax is in operation for a few years, no new products will have unseen embedded taxes.
There is a transition period that is unavoidable.
If a purchaser uses pre-FairTax assets to complete a consumer transaction, that consumer can be exempted from FairTax. Such transactions will be in diminishing numbers for a temporary time before coasting to zero.
These temporary period tax exemptions might compel some in Congress to call for raising the FairTax rate and that is a good thing because it would bring it out in the open. Such members will and should feel the heat.
Today’s Congress is out of control. They just a few weeks ago passed a $1.7 Trillion omnibus with a debt service going to Wall Street banks who borrowed from the their Federal Reserve at a quarter percent and lend to Treasury at 3.75%. Congress can stiff Larry Fink and Jamie Dimon.
Eff ‘em.