A consumption tax is a wealth tax. Imagine I make $100 in two possible worlds: In one, you tax my income at 10%, leaving me with $90. I save this remainder fo

A consumption tax is a wealth tax. Imagine I make $100 in two possible worlds: In one, you tax my income at 10%, leaving me with $90. I save this remainder for one year, earning 8% interest, and end up with $97.20 to spend. In the other, you don't tax my income at all. I save my entire income, $100, for one year, earning 8% interest, and end up with $108 to spend. However, there is a consumption tax of 10%. This means that I can only buy $97.20 worth of stuff. The objection here might be: a consumption tax might have an equal effect on the spending power of the rich, but it means that we might never gather any taxes from huge funds that are never completely consumed. Here's the problem with that logic: it is fundamentally impossible to tax someone on money they do not intend to spend. For example, I could take $1,000 from Bill Gates, but if he didn't intend to spend that money (or the interest on it), the incidence of the tax can not actually fall on Bill Gates, because it does not affect his life in any way. It must fall on someone else--for example, the business he would have invested in or the charity he would have given to. On the other hand, if Bill was planning to spend that money (or its interest), then I can rest assured that my consumption tax will collect my 10%.