FT's Effect on SENIORS
Seniors who are not still working, thought they were finished paying for the SS & Medicare "taxes". However, because a large portion of the 30% FAIRtax is used to fund SS/Medicare, seniors would start to pay for SS/Medicare again every time they make a taxable purchase. While those seniors who are still working would stop paying SS/Medicare "taxes", that savings would be reduced because they may well pay more in FT than they would have paid in Income Taxes - see Seniors (pdf spreadsheet).
The Seniors spreadsheet shows that many seniors will suffer from paying more FT than they would pay in Income Tax. Married seniors with income ranging from $23,540 up to nearly $130,000 would pay more in FT than they would pay in Income Tax. Singles with income ranging from $11,770 to $90,000 would also pay higher FT than Income Tax.
Assumptions: SS benefits $16,000 for Single, and $24,000 for Married. Pension income. Standard Deduction, Personal Exemptions, and Percentage of total income spent on items subject to FT declines as income rises.
While SS' annual inflation adjustment will result in SS benefits going up by the amount of the FT's increase in prices (nearly 30% to start), seniors' other fixed (i.e., non-inflation-adjusted) sources of income would not keep up with the FT's substantial price increases.