"Lets say a hard working, prosperous couple worked and saved all their life. They paid all their taxes and lived on the cheap, saving all their after-tax money for retirement."
Several points come to mind here.
1. With an individual savings rate of almost zero now, your hypothetical couple would seem in the extreme minority.
2. One of the economic benefits of the FairTax would be an increase in savings rates, as the punitive treatment of savings and investment of the current system would be eliminated.
3. To the extent that that hard working couple had invested in the equities of US corporations with some of the presumably substantial savings they had amassed, they would do extremely well under the FairTax. In fact, a couple of nationally known money managers have predicted a doubling of the DJI within 24 months of the FairTax going into effect. If we get even half of that, that would dwarf any differences in what this couple would pay for their groceries, clothes and other consummables.
4. How many people do you know who are in this category? By that I mean people who have been financially successful, have lived WAY below their means in order to accumulate retirement income, and when they retire, they expect their standard of living to go way up. I don't know anyone like that. Most of the people that I know become accustomed to a certain standard of living that is based on their earning capacity during their working years, and they hope to maintain somewhere close to that standard when they retire.
5. I don't know what percentage of retirement savings is in tax deferred vehicles, but it has to be substantial. Those people would not have to pay income taxes on those savings when they retire under the FairTax. That has to be factored into the equation. Also, they won't have to pay estate taxes when they pass on.
In fact, a couple of nationally known money managers have predicted a doubling of the DJI within 24 months of the FairTax going into effect.
Great. Do you have a link to a quote(s)? Along similar lines, about a year ago there was mention of a few large corporations saying that they would endorse/support the FairTax in writing. Something about moving their operations onshore.