Iʻve been opposed to a consumption tax (called the “Fair Tax” by proponents) because I had never seen a proposal where it could be made to be progressive.

A couple of reasons are usually given for advocating consumption taxes in favor of income taxes:

1. Working is a good thing, and we should not tax what people earn, theoretically discouraging them from working.
2. There are tons of income tax loop holes, and rich people often exploit them better than the less-rich.
3. A consumption tax is more “fair” because it does not penalize people when they make more money.

The basic proposal would be a national sales tax.  Since rich people spend more, they would pay more taxes.  In reality, this would shift the tax burden from rich people to poor people.

But I recently read a very interesting proposal that advocates a consumption tax as a way to encourage saving, while also addressing the issues of keeping it progressive.  The idea was to tax the difference between the personʻs earnings and the change in their savings accounts, i.e. their consumption.  This amount could be taxed at a progressive rate.  So if the person spent $20,000 in the year it could be taxed at some rate x, and if they spent $120,000 it could be taxed at some higher rate y.  There would be some logistical kinks to work out, like would it hurt people who invest in things like gold coins and art?  But I really like the idea.