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You keep asking these good questions and illustrating how little I know.
I'll get back to you on the fairtax system as I'm totally ignorant of it.
Fairtax system in a nutshell:
FairTax system abolishes all federal personal and corporate income taxes, gift, estate, capital gains, alternative minimum, Social Security, Medicare, and self-employment taxes and replaces them with one simple, visible, federal retail sales tax administered primarily by existing state sales tax authorities.
It wouldn't take federal and state taxes out of your paycheck, or the pension of retiree's.
All in all, if it didn't seem too good to be true, I'd back it. But I just don't see it going off without a hitch the way they say it will.