(NOTE: Items 16. and 17. below are taken directly from Congressman Linder's website, Q&A section.)

16. WHAT ABOUT SENIOR CITIZENS AND RETIRED PEOPLE?

As a group, seniors will do very well under the FairTax. Low-income seniors will be, in fact, much better off under the FairTax than under the current income tax system.

Seniors, like everyone else, will receive a monthly rebate, in advance of purchases, for taxes paid on the cost of necessities.

The income tax imposed on Social Security benefits will be repealed. The income tax imposed on investment income and pension benefits or IRA withdrawals will be repealed.

Pension funds, IRAs, and 401(k) plans had assets of $6.5 trillion in 1994. An income tax deduction was taken for contributions to most of these plans. All beneficiaries and owners of these plans expected to pay income tax on them upon withdrawal but will not be required to do so after passage of the FairTax.

Seniors have dramatically higher home ownership rates than other age groups (81 percent for seniors compared to 65 percent on average). Owners of existing homes will likely experience large capital gains due to the repeal of the income tax and the implementation of the FairTax. Homes are often a family�s largest asset. Gains are likely to be in the range of 20 percent.

The FairTax will make the economy much more dynamic and prosperous. Consequently, federal tax revenues will grow. This makes it less likely that federal budget pressures will require Medicare or Social Security benefit cuts.

17. WILL SENIORS BE TAXED TWICE ON SAVINGS?

No, seniors are taxed twice under the income tax today. Under the FairTax they won�t be. As surprising as it may sound, prices at the cash register will not go up under the FairTax.

The price of goods and services we buy today is inflated by the cost of income and payroll taxes paid by workers and businesses. These costs are passed on to consumers in the form of higher prices.

When income and payroll taxes are repealed, prices will come down 20 to 25 percent, according to Dr. Dale Jorgenson, Chairman of the Harvard University Economics Department. Therefore senior citizens, like all Americans, will not lose purchasing power. In fact, seniors will be able to buy more.

Government benefits will be maintained, seniors will receive a monthly rebate in the mail so they won�t pay taxes on the purchase of necessities, as they do now, tax-deferred investments will be completely tax-free; and if their savings are invested in any long-term income-generating asset such as stocks, real estate, or a long-term bond that can�t be called, their assets will increase substantially in value.

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