Initially, the FairTax concepts appealed to me. It would eliminate the burdensome task of filing tax forms, reduce income tax evasion, and tax purchases. It would reward saving by not taxing money until it was spent. However, with some additional research, I am no longer a supporter of the FairTax. I believe that enacting a FairTax proposal would actually penalize people like me, who are have been lifetime savers and are now retired. Here are the reasons that I believe make the FairTax would be unfair to me:
To note, I may get some benefits from a FairTax as a saver, if the current federal income taxes are eliminated. As I understand it, distributions from tax deferred accounts, e.g. IRAs, pensions and 401Ks, will no longer pay income taxes under a FairTax. The benefit could be a significant. However, with respect to taxes, I am generally a pessimist. As long as the 16th Amendment is in force, I don't have confidence that the U.S. government would ever permanently eliminate the income tax system. Therefore, I currently won't support any Presidential candidate that is advocating FairTax as a part of their platform.
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This is not financial or tax advice. Please consult a professional advisor.
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