How would they know for sure?
They wouldn't.
Who would slpit hairs about being off by 2% or 3% when the alternative is at least a 23% body blow?
Perfection is the enemy of the good.
Yes, it is cumbersome and it might take 100 or 200 U.S. Government bean-counters working year-round to keep it all straight (more or less) using U.S. Government monthly cost of living data.
Being very generous, if we pay each of those 200 U.S. Government bean-counters $70,000 per year to do that "cumbersome" work, it will cost the United States of America $14 million to protect the hundreds of billions of dollars of already-taxed savings that American citizens have saved.
How about the future earnings on the PTS money ?
Very simple.
Your PTS Debit Card would be worth exactly the amount that you had in post-tax savings the second before the Fair Tax took effect. Period.
What about future earnings?
Those were earned during the Fair Tax era and they would fall under the Fair Tax rules. If you wish, you could withdraw the amount to spend as you would any other Fair Tax money. However, that money will not add a penny to your PTS Debit Card amount that was fixed the second before the Fair Tax era began.
The PTS Debit Card amount is carved in stone the minute the Fair Tax takes effect.
There is nothing "cumbersome" about it.
If your PTS Debit Card account started out at $1 million the day the Fair tax took effect, the amount in your PTS Debit Card is $1 million. It will go down as you spend it but it can never go up by a single penny.
Once your PTS Debit Cards amount hits zero, that's it. It's gone and you are now living 100% in the Fair Tax era.
But what if your investment doubled your money in a year.
Good for you. The $1 million in your PTS Debit Card does not get a single penny added to it. The other $1 million is under the Fair Tax rules.......No income tax but you pay the Fair Tax when you spend it.
What about if you make a foolish investment? What if you had $1 million on your PTS Debit Card to start out but you blew half of it and only have $500,000 left in your account?
Too bad. So sad.
Once your PTS account goes to zero, your PTS Debit Card goes "Poof". Sorry. All your post-tax money is gone. Shoulda been more careful with it.
As my example shows, it doesn't seem necessary to do all that to maintain fairness.
As we said before, every person will have a different portfolio. "Close enough for Government work" might mean a few hundred dollars for one person or hundreds of thousands of dollars for another.
In my souvenir collection, I have an uncashed check from my Navy warship (with the ship's name on it) dated 1981 for..........17 cents.
The U.S. Navy would round out your pay to the nearest dollar every pay period. However, at the end of the fiscal year, if you had been short changed, even by 17 cents, the Navy would cut you a check. All the human programmer has to do is give it the instructions.
When you have spent decades of your life during the income tax era sacrificing to build your savings, you don't want a "good enough for Government work" treatment of it.
You want it done correctly or a near imitation thereof.
Maybe getting it down to the last 17 cents is being way too anal-retentive but "give or take 23% to 28%" is definitely not acceptable.
"Your PTS Debit Card would be worth exactly the amount that you had in post-tax savings the second before the Fair Tax took effect. Period."
Don't you actually mean whatever your cost basis was on your holdings ? Suppose the total after-tax money was just $200K of that $1M. The rest is unrealized capital gains. So $800K has never been taxed. Obviously it wouldn't be fair to get a skip on paying taxes on that $800K, right ? The PTS credit would be just $200K.
Tracking down the cost basis would be a pain, but at least it would be a one-time excercise rather than every year as I currently do. Liquidating certain stocks, options, bonds, futures contracts, and real estate to fund the PTS account might not be very easy or convenient, though. And it might be disruptive to the economy.