First, I wonder why you think it is fair for anyone to pay zero in income taxes. Doesn't your hypothetical family of four have any obligation to support the country ?
Second, a family of four with $40,000 income is paying 7.65% in Payroll taxes, even if they pay nothing in Income taxes. So they would be spending, at most, 92.35% of their income, which is $36,940. Buying all the same items at the same pre-tax prices, and adding the FairTax, they would pay $47,974. You must be looking at an old HHS poverty table. The figure for a family of four for 2005 is $5,902. So they would have spendable income totaling $45,902 available to buy those items. So they come up $2,072 short of being able to buy everything they used to be able to buy.
Third, most reasonable people will admit the competition amongst businesses will force the businesses to pass along most of their own tax savings as lower prices. That means if prices fall to $35,902 from their current $36,940, then this family would be able to buy all the same items as before. Ergo, prices need to fall $1,038 or 2.8% for this family to break even.
Fourth, this family likely purchases used (rather than new) vehicles, and they would be buying those vehicles without FairTax applied.
Bottom line is that this family is unlikely to be worse off.
"In exchange for what ?" This is really priceless.
People pay taxes to support their country. Did you think citizenship, defense, judiciary, (higher) education, etc. was all supposed to be FREE ?
"RAISE TAXES ON THE POOR!"
Now THERE'S a campaign slogan that will work...
Gee... I wonder why I've never heard it before.