I read your example in 199 but didn't follow it. Could you try again? I want to understand your point...
I don't know how else to say it. One person is paying twice the tax the other is paying.
How about: I am 65 years old, just retired and have $500k in my Roth IRA. I have paid taxes, say $125k, on this already. I will now pay another $125k in taxes as I spend this money for a total of $250k.
Another guy starts saving in his Roth IRA today. He doesn't have to pay taxes on the money as he earns it. He retires with $500k too. When he spends it he'll pay only the $125k.
I paid $125k more in taxes than the other guy on the same amount of money. How is that fair?
All I'm proposing is some way for people to shelter money that has already been taxed so they don't have to pay the sales tax on products purchased with that money.
The 'prices will be lower' bit is a red herring. Everybody will be benefiting equally from the lower prices so this can be eliminated as a variable. The fact of the matter is that some people will pay twice the tax as others.