Only if you ignore estate taxes...which FairTax eliminates.
For the rich (defined here as anyone with enough wealth that, if they don't spend it down, they will face estate taxes) they either have to realize the gains (and be taxed) and spend down or leave an estate which will be subject to estate taxes, giving them a maximum time window on taxation equal to their lifespan.
With "FairTax", which eliminates estate tax and goes to a strict consumption tax, there is no such maximum window.
> And consumption taxes benefit debtors at the expense of creditors. Income tax makes the debtor pay back the debt with after-tax dollars. Consumption tax causes the creditor to be paid in pre-tax dollars.
Because it also changes the cost structures on which debt is occurred, this only is meaningful as a one-time effect on debts that exist at the time of the transition to a predominantly-consumption-tax system, not as durable feature.
It would be if not for the "estate tax holiday" we have periodically which together with a bunch of other ways of avoiding the estate tax is why it only constitutes a negligible amount (0.6%) of federal revenue.
The fundamental problem with the estate tax is that it's a huge tax that happens with semi-unpredictable timing, which induces rich families to do estate tax planning to avoid having liquidity problems when it happens. But "estate tax planning" means paying fifty million dollars to tax lawyers and lobbyists to avoid paying a billion dollars in estate taxes.
In practice what it means is that rich families will do much more to avoid and lobby against the estate tax than they would against a tax that collected the same amount of money from them but more predictably over a longer period of time. Which makes it a losing proposition if your goal is to get the rich to pay taxes.
> Because it also changes the cost structures on which debt is occurred, this only is meaningful as a one-time effect on debts that exist at the time of the transition to a predominantly-consumption-tax system, not as durable feature.
It applies equally to the interest paid on the existing debt. And given that the total interest generally exceeds the principal (and exceeds it moreso for poorer people paying higher interest rates), the "one time effect" would be with us for a generation or more.
Well, yeah, it would be much simpler and more effective if inheritances were just taxed as income to the recipient with provisions allowing them to be split and recognized over several subsequent tax years (e.g., if the total inheritance received in any year is greater than 1/10 the pre-inheritance AGI, the excess can be recognized for tax purposes in subsequent years, with a minimum per year amount equal to the lesser of 1/10 the pre-inheritance AGI in the year received or 1/20 the total amount of the inheritance.)
So the proposal is to combine something like VAT with a basic income.
Doing that would cause low income people to have a negative effective tax rate (basic income exceeds taxes), low-middle income people to have a near-zero tax rate (basic income equals taxes), high-middle income people to have a moderate tax rate (taxes exceed basic income by a little) and high income people to have a higher tax rate (taxes exceed basic income by a lot).
In what sense is that regressive? It's the purest form of a progressive tax system. It even has a built in social welfare system for low income people.
The fallacy which is usually put up against this is that the super rich don't spend as much as they earn. The problem is, that's not how income tax works either. Bill Gates doesn't have to pay tax on the appreciation of Microsoft stock until he sells the shares and he doesn't have to sell the shares until he wants to spend the money. "Super-rich don't pay tax on money they don't spend" is the status quo.
And consumption taxes benefit debtors at the expense of creditors. Income tax makes the debtor pay back the debt with after-tax dollars. Consumption tax causes the creditor to be paid in pre-tax dollars.