Fair Tax for Senior Citizens
You have worked for many, many years and get a pension every month. Under the current tax plan you are taxed on the entire amount you received through the year. If you had a pension of $1000 a month (and I hope it was much more than that), you will be taxed on $12,000. I did my dad's taxes for several years and was appalled that his pension was taxed as income.
Maybe you worked for years and have a sizeable IRA. When you withdraw that money you will be taxed (unless you put that IRA into a Roth account, but most people have traditional IRA's). As I understand it, after a certain age, you will be penalized for not withdrawing a specific amount. I have heard that there is a 50% penalty if you fail to withdraw enough money after age 70.5. So you are both taxed and penalized for wanting to save your own money!
If you are lucky enough to have stocks and/or bonds you are taxed on the capital gains when you sell those stock. Let's say you sell stocks to pay for a medical procedure or you want to take a vacation; maybe you see your stock going down and want to get out ahead - the reason doesn't matter. You will be taxed on those funds. If you put the proceeds of that sale in your savings account you will be taxed at the end of the year. And you will pay taxes on that savings as long as you have a savings account.
Let's think about this scenario: your spouse passes away and you decide to move to a smaller house. You have a small mortgage (or maybe no mortgage at all) and thanks to today's real estate market you have a sizeable amount in proceeds that you put in the bank. It's for you "old age" or for a rainy day or whatever. Good for you! But. Uncle Sam requires that your declare each year how much you have in savings as part of your tax return. And you will pay taxes on that savings as long as you have a savings account. Ever hear that before?
The Fair Tax treats each of these instances the same way. You only pay taxes when you make a purchase. Your pension hits the bank on the 1st of the month. You will pay taxes on what you buy that month. Let's say your pension is $1000. If you spend $500 you are "taxed" on that $500. The tax is paid then and there, not at the end of the year (or rather when you file your taxes).
Under the Fair Tax, you don't pay tax on your pension, you don't pay taxes on stock sales, you don't pay taxes on the proceeds of the sale of your house, you don't pay taxes on your savings account or withdrawals from your IRA.
You will also receive, untaxed until used to buy new goods or services, a prebate each and every month based on the number of people in your household. Not based on your income or marital status, but on the size of your household. As a senior, you will receive a smaller prebate than a young couple with a couple of kids, but then, you will not be spending as much for the basic necessities of life.
As a person looking down the barrel of senior citizenhood, this is a no-brainer.