Welcome to FR.
The “fair tax proponents” do not insist on anything - they just want to get rid of the 16th and make taxation visible to the maximum extent.
The double taxation thing is an issue today too you know. Earnings are income-taxed, then taxed again when spent [at an average of 10%.] You just don’t see it.
Nevertheless, any double taxation at all is not acceptable IMO. The problem you describe is easily solved btw - just like the business inventory transitional credit was. The transitional inventory credit is to prevent inventory items in stock at the time of transition that had been purchased during the income tax from being taxed again. The same thing will happen w/ existing after-tax savings.
But the exemption will be partial b/c after-taxed savings are already taxed again when spent [about 10% as I said above.]
The important thing is to get rid of the income tax code and avoid bickering about the replacement. As you well know, the main strategy of those who wish to keep our current system is to create arguments on the minutia of any replacement to the extent that no replacement is made.
Principled, thanks for the welcome.
First off, the tone of my post is a bit harsh, as this was taken verbatim from a letter that I had planned to send to the Fair Tax Organization. I probably should have softened it bit before posting it here. I did not intend it to be a harsh attack against my fellow FReepers who support the Fair Tax, but to only raise my objection to having my after tax retirement savings and assets unfairly double taxed.
Yes, I’m well aware of the “hidden tax” included in the retail price of goods and services due to the fact that businesses are pressed to pass some of the federal income tax and fees on to their customers. But how much of this cost winds up in the retail price can vary greatly depending on how the cost is managed. The cost can instead be passed on in the form of lower dividend payments, lower wages and salaries, less money for R&D, etc. It would be wrong to assume that there will be an immediate 10% drop in retail price of everything when the Fair Tax goes into effect.
You mention a possible solution would be to give individuals a credit on their after tax savings and assets similar to the proposed transitional inventory credit for businesses to help resolve this double tax problem. But I have not seen that officially proposed by the Fair Tax Organization. There has to be a solution because I have a substantial amount of after tax savings of which I would not allow to be unfairly double taxed.
But again, until a solution is put in place, I would MUCH prefer the Flat Tax instead.