For the family you were using as an example, they wouldn't have to pay $123 for a bag of groceries. With the fair tax they calculated the price of goods would go down 22%, so they would pay $101(if the figures are correct). I think you get some kind of check each year for the government too. Basically, you get more extra money from the Fair Tax than you would lose by paying 1% more for everything, excluding used stuff.