The “Fair Tax” would be a worst case scenerio for my wife and I. We have both been working very hard full-time for about 25 years (in our late 40’s) paying an average of 38% in combined taxes per year, living frugally and saving as much as possible. In about a year, we plan on selling our California home, moving into an existing mobile home on my parents property, and helping them out in their old age for about 6 months of the year, and living off the interest on our savings (interest should come to about $25K/year...little or no income tax, due to “progressive” Calif./Fed tax rates). For the other 6 months we plan to buy a truck/RV combo ($50K or so) and travel the country until we get to be about 60-67 years old (our 401K’s, pension, Social Security?? kick in then). We then take our savings and build a new home for our later years. So for us under a “Fair-Tax”, the double-taxation would begin immediately, starting with the truck/RV $50K purchase, and then later on with the site-built home??? Not sure if “Fair-Tax” sales taxes would apply to building a new home on property you own. Fortunately I think the chances of the “Fair-Tax” passing in anything near it’s current form are low, maybe 1 in 1000 or less.
Actually you and your wife would be a lot better off if the Fairtax were in place under the scenario you lay out. First, you would receive any interest you earn completely free of taxation. Secondly, you would not pay ANY tax at all on your spending up to the current poverty level. And thirdly, all those pretax investments (401ks etc.) would enjoy a HUGE windfall in that there would now be no tax due when you withdraw the funds.
That truck/RV combo would likely not cost you any more under the Fairtax, with the tax included, than it would under the income tax as both of those items require very long supply chains for their manufacture. All of the taxes, and all of the costs associated with filing those returns, winds up in the price of every part going into both items. All of that would disappear with the fairtax in place.