Fair Tax Double Taxation

Fair Tax double taxation.

Let's throw a curve ball at "Fair Tax" advocates.

What happens to all the people who have money have tied up in Roth IRA's?

You know the people I am talking about. The one's that where motivated to convert some or all of their traditional IRA into a Roth IRA by paying the taxes (yielding a surge of government tax revenue) on the amount of money in the traditional IRA as they converted it into the Roth IRA. Promise was they would be able to redeem the Roth IRA principal and income later without paying any income taxes at all (there were other additional benefits promised with the Roth).

But what happens if we switch over to a "Fair Tax"? Isn't the principal that was switched over to the Roth IRA then going to be subject to double taxation? Instead of tax free future earnings, aren't all of the earnings, when they are spent, going to be subject to the 30% Fair Tax on expenditures also? (You can argue 23% if you want, but I'm ready for you.) Heck, a Roth IRA is going to be worthless. You might as well have your money in a traditional savings account.

Suckers! Well, if the government offered you something that was too good to be true (Roth IRA) you should have known they would find a way to change the rules on you to dip their hands back into your pockets.


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