The existing plan also makes a phased in SS/M privatization MUCH harder.
Yes, it does. Putting SS/M into a “consolidated budget” was a mistake because it had its own separate funding. (The same could be argued with the fuel taxes and Department of Transportation.) Eliminating the separate funding makes SS/M even more of a mess.
The FairTax breaks the relationship between contributions to SS/M and the benefits paid out to an individual. It effectively removes the cap on SS taxes so high earners get taxed on all their spending/income, but their benefits are still cut off as though they had mediocre earnings.
Ironically, it also cheats people whose income is mainly from tips — waitresses, doormen, haircutters, etc. — because it allows a maximum of $5,000/yr of tip income to be counted for SS benefits calculations.