Hmmm… Not sure if this is the plan or not, but I do like the idea of a tax system that encourages people to consume less and rewards frugality.
I remember studying this in graduate school, although it was simply called a consumption tax at hat time. I cannot really comment on their numbers, they seem overly optimistic that is for sure, but I would really have to understand what they are saying.
A consumption tax is quite possibly more fair then an income tax for two simple reasons. An individual’s consumption is far streadier over their lifetime then their income. So Individuals with similar lifetime consumption but different income streams are pretty much taxed the same and therefore we have a better base to judge equity over a lifetime as opposed to one year.
You can confirm this for yourself by comparing two people. One with a variable income (for example sales), earning $100,000 and $20,000 over two separate years. And one with a steady income of $60,000 each year. Under a consumption tax they could be expected to pay reasonably similar taxes over the two years. But under the current income-based system the first individual will pay more. One concept of equity is that similarly situated individuals should be treated the same.