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Let me clarify my comment. Hypothetically, I have worked for 40 years and built up a large pile of US dollar bills after paying all income and payroll taxes. Your new tax regime is enacted. You are a new worker, and will not be subject to any income or payroll taxes, ever. You can therefore build up a pile of US dollar bills that will not be taxed until spent.

Yet when we now buy things, our dollar bills are both subject to the same new federal sales tax. You should be happy about that. I will not be, because I have been taxed on income when I earned my dollar bills and taxed again when I spent them, whereas you have been taxed only when you spent your dollar bills.

I'm not going to like your tax plan.

"Yet when we now buy things, our dollar bills are both subject to the same new federal sales tax. You should be happy about that. I will not be, because I have been taxed on income when I earned my dollar bills and taxed again when I spent them, whereas you have been taxed only when you spent your dollar bills."

Kevkrom's initial response to your concern is right on. Once competition drives out the cost of the current system, we will be paying approximately what we do now (on an after-tax basis) for our consumption (ignoring the effect of the Personal Consumption Allowance for now). The biggest difference is that, rather than being imbedded in the price, the taxes that you pay will be highly visible.

If you were going to buy a new car for, say, $25K before the FairTax were enacted and that same car costs app. $25K with the FairTax after it is implemented, are you any worse off because now you can plainly see the tax component? I think not.

When you add in the fact that you pay no taxes on a net basis up to the poverty level because of the PCA, you will then see a 15 - 30% increase in your purchasing power up to the poverty level.

You are going to LOVE the plan.

Yet when we now buy things, our dollar bills are both subject to the same new federal sales tax. You should be happy about that. I will not be, because I have been taxed on income when I earned my dollar bills and taxed again when I spent them, whereas you have been taxed only when you spent your dollar bills. I'm not going to like your tax plan.

That's too bad for you, because you would be at no disadvantage under the new plan while holding back everyone else for the future.

Think also about the advantage you would get, in addition to what the young person with no savings would have: no capital gains taxes on your long-term (or short-term, for that matter) investments, including sale of a home. Any deferred income plan would be completely free from income taxes.