Thanks for your answer. But when you wrote, "The taxes they pay with the NRST" you hit the nail on the head.
The gvt has promised me that when I take money out of my Roth I won't have to pay "income tax" on it. The gvt is willing to do this as I already paid "income tax" on the money I used to buy the Roth. And gvt uses the term "income tax" because that's the way we're taxed now. So to parallel the Fair Tax system, when "income tax" is replaced by "NRST" the gvt should promise, when you take money out of your Roth IRA, you won't have to pay NRST on it when you spend it.
Otherwise, where is the advantage to the Roth IRA under the NRST?
For the record, I am very much in favor of the NRST. But I'm not willing to blindly follow Neal Boortz, et al in promoting it.
IMHO, there are "sticking points" with the NRST that need to be addressed. This business with the Roth IRA is one of them.
Another sticking point, IMHO, is municipal bonds. Munis have been used for years to finance this country's infrastructure. With no tax advantage, why will people buy these bonds?
You raise valid points. However, I am reminded of the fellow who would hit himself in the head with a hammer because it felt so good when he stopped. I am also reminded of hazing where past sufferers are intent on imposing the same pain on the next group.
I don't intend that as insulting to those in the position you describe but to point out that the problem lies with politicians and the present system, not with the NRST.
The way the present system became 60,000+ pages is by politicians trying to address a myriad of problems caused by a dysfunctional tax system, a system that starts in the wrong place, on income. That is the case with most liberal ideas. They call it unintended consequences and instead of admitting error they keep jumping through hoops trying to defray bad consequences.
When you say that the government promised you that... I am reminded of the 80's real estate bust and the S&L crash. That happened because the government changed the rules in the middle of the game. What had been passed to give incentives to investment was suddenly reversed. Did the government lie? I guess they just changed their mind.
The recent Enron, Global Crossing, etc., scandals resulted from Congress, Chris Dodd was the instigator as I recall, changing the generally accepted accounting rules. This allowed the shenanigans which followed and those kinds of shenanigans were purposely encouraged.
How is this relevant? Who is to say that if we stay with the present system that Congress won't change its mind on Roth IRAs or anything else? If we keep a Republican majority it is less likely but we can't be sure of that. If the Democrats win we can be sure that all of Bush's tax cuts will be repealed and an additional increase is also likely. Will they honor their commitment to the Roths? I wouldn't bet on it. That sounds like a good place to eliminate "tax havens for the rich".
The whole point is why stay with a failed system based on a past government promise? As I said, you really won't be taxed any more when you spend your money than you are being taxed now. The only difference is it will be called a tax rather than hidden as a price.
If you start exempting Roth or any other taxed money you have opened the door to all kinds of emotional appeals for other exemptions and the whole deal is dead.
The NRST is a better deal for America and everyone in it and we should all support it.
The real point is that if you took the money out of the Roth and weren't taxed on the withdrawal (some circumstances are taxed with a Roth) and then spent the money under the present system, you'd be paying the "hidden tax" of prices raised solely by the income tax system.
If you kept the Roth and then spent the money under the FairTax system - and spent it on taxable items (not everything is taxed) - you'd pay the FairTax which would probably be about the same as the "hidden tax" when spending under the present system. After all, the government didn't promise to not have "hidden taxes" (which they've had ever since 1909 - the corporate income tax preceeded the individual income tax). Also, under certain circumstances some of the Roth money can be taxed under the income tax so check the law more closely.
It's probably about a tradeoff dollar-wise except that with the FairTax YOU get to choose when and how much you pay in tax and can control that by controlling consumption - which is much less true under the present system. Also, if you retain the funds as an investment, that investment isn't taxed under the FairTax so that it can build up faster.