Social Security Is Approaching a Crisis. The FairTax Is the Solution!
For generations, Americans have been told that Social Security is a promise: work, contribute throughout your career, and the system will provide retirement and survivor benefits when they are needed.
That promise is now approaching a serious financial test.
The 2026 Social Security Trustees Report projects that the Old-Age and Survivors Insurance Trust Fund—the fund that pays retirement and survivor benefits—will exhaust its reserves in the fourth quarter of 2032. At that point, continuing revenues would be sufficient to pay only about 78 percent of scheduled benefits.
That’s only six years away, meaning that if that happens, it’s not going to be some future generation that feels the pinch. People who depend on Social Security today could be facing a nearly 20% cut in their benefits in just a few years.
If the retirement and disability trust funds were combined, their reserves would last until approximately the third quarter of 2034, after which only about 83 percent of scheduled benefits could initially be paid.
The Congressional Budget Office is even more pessimistic. In its 2026 projections, CBO estimates that the retirement trust fund will be exhausted in 2032, and that if benefits were limited to incoming dedicated revenues thereafter, retirement and survivor benefits would have to be reduced by an average of approximately 28 percent between 2032 and 2036.
Why is this happening?
Social Security was designed around payroll taxes paid by workers and their employers. But America’s demographics have changed dramatically. There are fewer workers supporting each beneficiary, while retirees are living longer.
The Social Security Trustees project that the ratio of covered workers to beneficiaries, approximately 2.6 workers per beneficiary in 2025, will decline to about 2.3 workers per beneficiary by 2035.
At the same time, expenditures already exceed current program income. In 2025, Social Security received approximately $1.45 trillion while spending approximately $1.61 trillion.
The President and Congress are facing some really unpleasant choices under the existing system: raise payroll taxes, reduce benefits, increase the retirement age, borrow more money, or combine several of these approaches.
But there is another possibility: Change the way Social Security is funded.
That is one of the important but often overlooked features of the FairTax.
The FairTax Act, currently introduced as H.R. 25, would repeal federal payroll taxes, individual income taxes, corporate income taxes, and estate and gift taxes. In their place, it would establish a national consumption tax on the retail purchase of new goods and services.
The bill specifically provides for national sales tax revenues to be allocated to the Social Security Old-Age and Survivors Insurance Trust Fund and Disability Insurance Trust Fund, as well as Medicare trust funds.
Some dishonest FAIRtax opponents have tried to claim that by eliminating the payroll taxes, the FAIRtax would effectively kill off both Social Security and Medicare. The opposite is true.
Under the FAIRtax, benefits will continue for those who depend on them, and workers would continue to have their wages reported for purposes of determining future benefits.
What changes is the source of the funds supporting those benefits. Instead of relying primarily on taxes imposed on wages and employment, Social Security would receive revenue generated by national consumption.
That distinction matters.
Today, roughly 96 percent of Social Security’s dedicated funding comes from payroll taxes, according to CBO. That means the system depends overwhelmingly on wages earned by a number of workers that is shrinking relative to the number of people receiving benefits. That funding model is simply unsustainable.
The FairTax would broaden the financing base. Instead of taxing only workers when they earn wages, the federal consumption tax would be paid when people purchase new retail goods and services.
Retirees, tourists, people spending accumulated wealth, and participants in the underground economy would all contribute when they consume taxable goods and services.
At the same time, workers would no longer see Social Security and Medicare payroll taxes deducted from their paychecks. Employees currently see 7.65 percent withheld for Social Security and Medicare, while employers pay another 7.65 percent. Under the FairTax, those payroll taxes would disappear.
The FairTax also contains the prebate, or Family Consumption Allowance. Qualified households would receive a monthly payment designed to reimburse the FairTax on spending up to the federal poverty level. This protects basic consumption up to the poverty level while moving Social Security financing away from a tax imposed directly on work.
The FairTax changes Social Security’s financing source from one based primarily on the wages of a shrinking number of workers into one based on the much broader American consumption economy.
The FairTax alone does not repeal the laws of mathematics. Congress must still ensure that the revenue allocated to Social Security is sufficient to meet promised benefits.
Replacing a narrow payroll-tax base with a broad consumption-tax base provides policymakers with a fundamentally different—and more sustainable—funding mechanism.
The FairTax offers a different answer: protect promised Social Security benefits, eliminate the payroll tax on American workers, and finance the program from the broad consumption of the entire economy.
CONCLUSION
Social Security cuts are only six years away. Why should a national retirement system depend almost entirely on taxing the wages of an increasingly smaller number of workers relative to beneficiaries?
The FAIRtax is the solution!
The present income/payroll tax system benefits only a small percentage of the population—the very wealthy and Members of Congress who fund their re-election campaigns by selling favorable tax treatment to the highest bidder.
For the rest of us, it’s an expensive, intrusive, incomprehensible mess that none of us fully understands.
THE FAIRTAX IS THE ANSWER.
The FAIRtax Act (H.R. 25) is more than just a proposal for a retail sales tax; it is a fundamental restructuring of the federal fiscal structure. Unlike other excise taxes which normally are applied to specific products and in different percentage amounts, the FAIRtax applies a 23% rate to all new retail products and retail services.
The FAIRtax is a national retail sales tax on new retail goods and retail services which provides a family credit so that all purchases up to the poverty level for each family are not taxed. There is no withholding from your paycheck, and YOU NEVER HAVE TO FILE A TAX RETURN TELLING THE GOVERNMENT HOW MUCH YOU EARNED AND HOW MUCH YOU SPENT, AND YOU’LL NEVER BE HARASSED BY THE IRS EVER AGAIN.
Many of you have labored tirelessly for freedom from the federal income tax and the IRS. You deserve a great deal of credit for your efforts to educate the American people on the need to fund the American government in a way that is good for America and returns freedom to the American people.
It is imperative, though, that we don’t replace the current income tax and the IRS with an alternative system that can still be manipulated by the Ruling Elite. We must let Congress and the President know that the best way to replace the income tax and the IRS is with the FAIRtax.
Make no mistake about it. The FAIRtax is a grave threat to the Ruling Elites. It will strip them of their power and their ability to control us though the tax system. Their opposition to the FAIRtax will be fierce and unrelenting. And don’t think for an instant that they won’t use half-truths, deception and downright lies in their desperate attempt to hang on to their power.
However, with the support of this President, we can finally eliminate the income tax and the IRS!!!
Of course, the best course of action is to not only repeal the income tax and abolish the IRS but to repeal the 16th Amendment as well so no future administration can ever shackle the American people with an income tax again.
We must come together and ensure that real tax reform, the FAIRtax, is not subverted by the Elites in D.C.
This will take the diligent efforts of all of us. We need your financial assistance, and we need your grass roots assistance.
If you have contacts that will allow us to get more information to President Trump about the FAIRtax please let us know.
Please email us at info@FAIRtax.org and we will give you some options on how you can best help us.
At a minimum, please call your Congressional representative and ask if he or she supports the FAIRtax. If so, thank him/her for their support and suggest they become a cosponsor of HR-25 if they’re not one already. If not, ask why not. If your representative claims to be unfamiliar with the FAIRtax, offer to have someone come to their office and explain it to them.
Please go to this link to invest in AFFT and help us pass the FAIRtax. It’s an investment in your and your family’s future.
THE SOLUTION—PASS THE FAIRTAX!
Why would D.C. pass the FAIRtax and give up this almost unlimited source of donations? The only way that they will is if the rest of us demand it!
Isn’t it time to end this ludicrous tax collection system and the IRS?
HELP BRING ABOUT REAL TAX REFORM AND STOP FUTURE IRS ABUSES
By contributing (investing) $10.40 per month, you help provide a financial base to AFFT. If you can make larger contributions (investments), these will be used not for salaries, as we are all volunteers, but for the needed updates to our economic studies which will be vital for all future years.
Please go to this link to invest in AFFT and help us pass the FAIRtax. It’s an investment in your and your family’s future.