If I normally make 60k a year and get a one-time payday of $1MM, I'll be paying around 13% more in income tax on that million dollars than I do on my regular income. Even with AMT it isn't a huge deal. This seems pretty reasonable to me. It's not perfect but it's not a reason for completely eliminating income tax. It's a reason for having exemptions, which is exactly what this article is about.
>If they have more money in their pocket, they will spend. That is what America is built on.
This is simply not true for people with millions of dollars. Look at the percentage of income spent for someone making $500k a year, and the percentage spent by Bill Gates or any other billionaire. It's a huge difference, and there's a huge difference between both of those groups and someone making $100k a year who is usually spending almost all of their income. Consumption tax is also completely ignoring the "spend it overseas" and million other loopholes.
I am not convinced any method of consumption tax I've read about, regardless of safeguards, would retain the same level of tax income the government receives while also not increasing the burden on lower and middle income households. The vast majority of tax revenue comes from an extremely small percentage of earners, and you'd be losing the vast majority of that income if you only taxed their spending.
The only way I can see this working is if you almost exclusively taxed things rich people bought. Increase sales tax on homes over $1 million, cars and boats over $200k, private jets, etc. But the tax rate on these would have to be ridiculously high, more than doubling their costs. All the rich people would just buy them overseas.