> A system that only taxes spending fundamentally has problems in that the richer people can afford to save and invest.

That is an existing problem inherent to any tax system. It's just saying "Rich people can afford to not spend all of their money". I don't see how that's fundamental to taxing only spending.

Making sales tax less regressive would be a good thing.

The implementation difficulties don't bother me per se; I think what's making me not like this idea is that it wouldn't do much for wealth disparity. If you're Wealthy with a capital W, you don't really spend that much, compared to your income.

But even if I'm also interested in tax policies to decrease the accumulation of massive amounts of wealth and the accompanying power in the hands of a single individual, I shouldn't dislike a tax policy that would do a different good thing -- if it could be implemented -- just because it doesn't do the other thing I want.

However

A 10% sales tax is a 10% tax on poor people's disposable income since they have almost no savings. How do we square that regressive circle?

A progressive sales tax not based on purchasers income, but the type of good. For example, luxury goods should be taxed higher and basic staples very low to none. This the wealthy could not avoid tax by simply shifting money around political jurisdictions. This system would encourage transparency, encourage wealth creation as well as thrift in lower and middle income earners.

Also, a side benefit (not that I entirely agree with it) is this is a way to enforce social policy like healthy eating. Tax unhealthy items like sugary food and tobacco highly (up to a point). This is done already in the United States successfully. And if you want more tube riders and less drivers in a city, have a very high toll and vehicle purchase tax. Singapore does this successfully.

Some countries that have no income tax already employ this to an extent by taxing certain sales and imports. I think this type of system is worth experimenting with at least on the city-state or state level (canton / province / state). If it does not work, you can always go back.

There's been talk of this type of system in the US but it's not likely to gain traction. The real reason for progressive income tax is not good policy, but divide and conquer class politics. Something all sides of the political probably spectrum agree with: governments need to be good stewards of tax revenue no matter the collection method.

https://en.wikipedia.org/wiki/FairTax (note the section on prebates for poor people - similar to basic income).

The current system is regressive in practice, though not in theory. If this wasn't the case, Buffet wouldn't be paying 17%.

Spending 100%+ of your income on consumption can be the norm for lower income earners, it is true. That does not extend however into 100%+ of income spent on consumption that is required for basic sustainability, especially in rich countries such as in North America or Europe.

There is no incentive under the current system for any income bracket to spend within their own means, regardless of what those means may be. The high levels of unsustainable personal debt illustrate this perfectly.

This results in overspending on "luxury" (i.e. not "required") goods - even by the "poor". There are few incentives that encourage the poor to establish wealth through savings. There is also no incentive in the system to have individuals increase their income to match their spending, although that's admittedly a much harder accomplishment.

With an income tax system that isn't perfectly flat, the problems you highlight are simply hidden, if not encouraged. With a flat based taxed, they are not, but it is regressive.

With a flat consumption based tax with a level of social control through either personal spending exemptions or through item based exemptions (baby food, for example) we could do a better job of managing the regressive nature of tax systems in general than we do right now.

In addition, we expose basic economics to those who have difficulty understanding the concept by providing strong incentives to build wealth and consume less, regardless of income bracket. This is something we should do.

A person who makes $10M a year spends a much lower percentage of his income than someone who makes $40K a year. So now we're taxing the $40K person heavily, while the $10M person pays comparatively almost nothing, even accounting for lavish and expensive lifestyles.

It reinforces a negative cycle - the rich get richer, the poor get poorer, and social mobility is removed. When the poor lose all hope of improving their lot because the system is so stacked against them, instability and unrest results and... well, the rest of this story might get a little violent.

This is probably a worse idea than, say, the flat-rate income tax that is practiced in Hong Kong and elsewhere.

I'm sorry but its just a terrible idea.

You can get a 0 deductions system with a progressive tax system too, it isn't some magical property of a flat tax.

In fact, there's a whole batshit-crazy tax plan called FairTax that proposes changing all taxes to a simple sales tax.

Solution: sales tax with lump-sum redistribution to make it progressive. Forget income tax.