How is this considered "good" in this scenario? Income is taxed anyway. So how to rerouting money away from "taxed income" to "taxed gifts" help anything?

It would mean that income is taxed twice or equivalent to it being taxed higher. Under a core assumption here that the tax revenue is used to help, this is better than it not happening.

More importantly though, it's not a precise tax plan it's intended to show the absurdity of the outcome we currently have rather than show a particular way out. That the answers are often "but there would be loopholes" rather than "having people amass much more wealth is inherently good for us all" is telling.

This wealth might not be accumulated through income, and thus not taxed as income?