Middle class retirees, like myself, would be devastated. We spend most or all of our income, and we now pay only a few percent in federal taxes. Under the Fair Tax we will lose thousands of dollars a year.

I’d also question “income taxes and the cost of complying with them currently make up 20 percent or more of all retail prices” in the original post. 2007 corporate taxes as a percent of retail sales are estimated to be about 7.6%–not that prices would necessarily fall by even that much.

Things obviously don’t add up. Everybody can’t be better off, as the Fair Tax supporters imply.

I don’t have any problem with the concept of a sales tax, but the current formulation would financially ravage many of our elderly, and that’s unconscionable.

The Fair Tax folks just need to be honest about where the burden falls. Their website is very deceptive. Just try out their calculator. If you look closely, you’ll see it doesn’t handle SS and pension income. Wonder why? If you do enter it as income, you get a completely wrong comparison with the current system.

All in all, it appears the Fair Tax just one more dishonest tax scheme! I could be wrong, but I need to be convinced. An honest and accurate calculator on the Fair Tax website would be a good start.

(1) Replace the Federal personal income tax, Federal corporate tax, and they payroll tax (Medicare and Social Security) with a 23% sales tax.

(2) Providers of goods and services will reduce prices up to 30% offsetting the 30% sales tax applied to new purchases and all services.

The problem with item (1) is that the Fair Tax is in effect a 30% tax. The proponents arrive at 23% sales tax rate by saying the $30 tax on a $100 purchase of goods and services is really 30/130, or 23%.

The problem with item (2) is that providers of goods and services will not reduce prices up to 30% to offset the new sales tax of 30%. The vast amount of the tax savings, reduced costs, and increased profits will flow to the bottom line and be passed onto executives and owners, not the employees or customers.

The savings from moving manufacturing to low-cost sweat shops in Asia, China, Mexico, cutting US jobs, and dropping Federal Corporate taxes to 5% to bring back money from overseas entities went directly to the executives and no one else.

When the Medicare Advantage HMOs talked the Government into giving them a $7 – $9 Billion dollars more than Medicare spends on Medicare beneficiaries, most of went to executive perks, bonuses, and retirement for the HMO executives (such as the $400-Million Dollar taken by one HMO executive on his retirement).

The Fair Tax proposal works directly against the needs and contribution of tens of millions of current retirees and increasing numbers of baby boomer retirees approaching retirement.

The Fair Tax proposal will enable retirees, most of whom have a Federal Tax obligation of less than 10% and no payroll tax to pay a tax of 30% on all their purchases with an offset for people below the poverty line. Since most retirees spend most of their annual income, the tax may well approach the 30% rate for the rest of their lives.

Retirees will also pay a 30% tax rate on purchases made with Roth-IRA income which was supposed to be tax free. They will also pay a 30% tax on purchases/services made with Social Security income that is currently tax free for many retired individuals and couples, and partially taxed for others.

The fun will only be starting. If the Fair Tax is enacted, the proponents will then recommend the following:

(1) Eliminate the Social Security Trust Fund (which has loaned Trillions of Dollars to the US Government) and state there is no need to return the Trillions they borrowed and spent. They will propose funding Social Security and Medicare out of the annual Federal budget.

(2) Declare the Social Security and Medicare beneficiaries to be “freeloaders sponging off the largesse and charity of the Government” and guilty of a giant entitlement fraud perpetrated upon the hardworking titans of industry, notwithstanding that tens of millions of Americans have prepaid payroll contributions that will sustain current Social Security benefits for another 30-35 years. This was based on the foolish assumption that the US Government will pay back funds borrowed from the Social Security Trust Fund (the Payroll Taxes paid by working Americans and legal resident aliens).

Note: If we can pay back funds borrowed from China and Saudi Arabia, we ought to be able to pay back the contributions borrowed from the Social Security Trust Fund (that were received as payroll taxes paid by working American citizens and legal resident aliens.

(3) The final step will be to means-test the receipt of Social Security and Medicare to make sure that no one ever receives back benefits they paid for over working careers of 40-50 years or more.

(4) Now that they have decimated retirement and health care for tens of millions of retired Americans, they will now subject them to a 30% sales tax for the rest of their lives to continue the charity program for the friends of the Fair Tax and Global Economy (Note: Middle Class not included).

American Industry, Members of Congress and the current Administration have participated in the decimation of defined benefit pension plans, eliminated millions of US jobs and run the Federal deficit from approximately 5 Trillions Dollars to well over 9 Trillion Dollars in the name of Global Economy (and a welfare program for their friends).

The quote that comes to mind on this giant Ponzi scheme, which I believe was made by Joseph Welch at the Congressional Army hearings in the late 1950′s regarding Congressman Miller (R-Buffalo, NY), is “HAVE YOU NO SHAME”?