HOW WILL THE FAIRTAX AFFECT SOCIAL SECURITY REFORM?
The FairTax does not affect Social Security reform efforts. It does not change Social Security benefits or the structure of the Social Security system. It simply replaces the current revenue source (payroll taxes) with a new revenue source (FairTax revenues). Research shows that consumption is a more stable revenue source than income. If Social Security is reformed or privatized in a way that reduces the governments need for revenue, then the FairTax can be reduced. For example, if a mandatory private savings program is implemented in which people must save 10 percent of their income and Social Security benefits are curtailed, then the FairTax rate can be reduced just as payroll taxes would be reduced.
