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People also pay income taxes on tax deferred income such as a 401K plan when they withdraw from it.

The Fair Tax would screw over people with Roth IRAs.

The inevitable rise in price inflation would also devalue everyone's post tax savings, which would be very significant for a large portion of the population.

The Fair Tax is revenue neutral. It moves the burden of corporate taxes to a sales tax. It moves the burden of the personal income tax to a sales tax. However, it does not remove the tax burden.

If the tax burden is shifted, rather than removed, where are the benefits coming from?

Reduced compliance costs for one, but there will still be considerable compliance costs as well as tax fraud.

The real place where they are expecting benefits is by increasing the cost of imported goods more than they increase the costs of domestic goods.

It is an import tariff that isn't an import tariff. American companies would be relieved of their direct income tax burden, while foreign imports would still have their tax burdens in their countries.

However, American exports would not be taxed. No corporate taxes, and no sales taxes since it is sold outside the US. Despite the 14% in sales taxes in Ottawa, Canada I would be able to have significant savings buying US goods that were exported to Canada, paying Canadian taxes, and then sneaking the goods back into the US.

Different people are bound to have different opinions on if that is fair or not just like different people have opinions on forms of protectionism vs forms of free trade.

However, this is going to have a very similar effect as putting an import tariff on all good imported into the US to shift a sizable portion of our tax burden to such a tariff.

If you think such a broad tariff is a good idea, then the main remaining problem with the Fair Tax is it's effect on savings.

If you don't think such tariffs are a good idea, then why is this really and better than a flat income tax with no deductions or exceptions which would also drastically reduce compliance costs?

Excellent points.

The first one you made I did also - whether you have an IRA/401k or a Roth, someone will be screwed. That would need to be addressed for sure.

This country was run on import/excise taxes from its inception until 1916. It served us well then and wouldn’t hurt us now IMO. Every other country uses this system.

I don’t see compliance costs being more onerous to a business than the current collection of state sales taxes. If you think otherwise I’d like to know why you think so. You will never get rid of tax fraud. I think compliance/enforcement will be significantly less costly because there will be less opportunity to fudge, and there will be fewer entities reporting taxes.

I also think that the savings/investment rate of individuals will tend to increase because the tax will be visible on consumption, thus discouraging some.

The downfall of a flat tax is that we keep the IRS and have the annual exercise of reporting income etc. Then there will be the same pressures from special interest groups to give specific exemptions for perceived social steering and we’re right back to the garage Stalinist system we have now.