You are right. Fair Tax would eliminate the withholding for Social Security (and Medicare), but the employers would still have to report the income. What we need is a big dose of Social Security reform. Something like phasing it out some day. I'm not holding my breath for that one.
True. Plus Medicare and Medicaid reform. And eliminating the Department of Health and Human Services, eliminating the Department of Education, eliminating the Department of Commerce, eliminating the National Endowment of the Arts, eliminating the National Endowment for the Humanities, eliminating the Department of Agriculture, eliminating the Department of Housing and Urban Development, and eliminating the Department of Transportation.
Of course, once we did that, a Steve Forbes-type flat tax of 10% should be enough to cover all government spending. Cutting spending should be the priority -- not a "fairer" or "easier" way of stealing $3 trillion from the taxpayers.
My guess is that the FairTax will precipitate SS reform, but the reform will be to expand the system. Now, SS contributions are made by the employer and the employee, with the FairTax, SS revenues are derived from the sales tax, in other words, every consumer pays directly for SS, but not everyone qualifies for benefits.
There will be a move to expand benefits to all, since all pay directly.