The internet functions much like the post office. The Media Access Control Address is the equivalent of the street address and the Internet Protocol Address is the Zip Code. The addresses have to be in clear text for the internet to function properly. Tor uses Encryption and Network Address Translation NAT to conceal the real source IP address by replacing the source IP with the IP of the Tor Router. NAT allows for anonymous internet access and encryption provides for confidentiality. The problem with Tor is that a compromised Router can be used to launch a man-in-the-middle attack. Stealing online credentials.
Any commercial VPN service provider provides the same level of protection as Tor.
Bulk data collection is immoral and unethical. Back in 2006 I found that the USA was hosting photo shopped child porn. They used a _javascript_ vulnerability to create a backdoor on the visiting PC. Their hack only worked if the user's account has admin privileges. Never surf the web on windows using an account with admin privileges. The last time I checked on the vulnerability was in 2010 and it was still not fixed even though it was well known. I personally believe that the federal government was not letting MS fix the vulnerability because they were using it as a back door for data collection. 2006 is when I first moved to GNU/Linux with SUSE Enterprise Linux Desktop SLED 10. By 2011 I no longer used Windows on my personal systems so I stopped tracking the vulnerability. I can guess that it is probably still not fixed.
The USA does not have a constitutional right to privacy from the government. The only thing that comes close is the constitutional right requiring a warrant for search and seizure of documents and property.