[JoshTriplett]

> Also, switching to this program would be a one-time double-tax on savings which will disproportionately affect those who've saved more; i.e. "progressive".

i.e. "putting retirees out on the street". Such a bill would need to provide a fix for that case, where someone has a fixed amount of savings intended to provide for themselves in retirement and cannot afford a sudden 10% increase in all prices.

For instance, one possible patch would be to look at people's lifetime income (already tracked by the Social Security Administration), and offer a one-time exemption up to a certain threshold, effectively calling the corresponding savings "already taxed" and providing an exemption. The challenge would be doing that without creating massive additional complexity in the tax code after that one-time event.

(This would only apply to people with post-tax retirement savings. The solution for pre-tax retirement savings is much simpler, since it won't get taxed at withdrawal anymore.)

> I'm still not positive about intergenerational wealth transfers

They wouldn't matter anymore, because they're all on the income side, and taxes would all be on the spending side. By taxing when the money gets spent, rather than when the money gets made, you no longer care where the money comes from.

You also no longer care about people who made their money in other jurisdictions, or many other issues. If you live in a country, you'll need to spend money in that country.

> I'm a big fan of a FairTax-esque approach since it simplifies things dramatically

Hopefully, but there's a pile of additional complexity involved in definition, to deal with suppliers and intermediate goods. There's a ridiculous amount of complexity in the definition of VAT; some of that is unnecessary bought-and-paid-for exemptions and adjustments on item types, but even after avoiding that, there's a pile of complexity involved in what "value added" means.

[namdnay]

But wouldn't this encourage the rich to spend overseas? They would pay no tax on their income, and then they'd be free to go and spend it abroad in countries where there is an income tax, but no/lower consumer tax.

[JoshTriplett]

(I'm assuming you meant "travel and spend", rather than "order for shipment", since the latter is handled by applying sales taxes to imported goods.)

First, if they're traveling that often, they're going to be paying a substantial amount of travel expenses, subject to sales tax. Might also be worth considering if currency conversions should be subject to sales tax.

Second, who can afford to do the majority of their spending in another country, while not actually being a resident of that country instead?

Third, a country would get significant additional tax revenue from visitors and tourists, who don't make income in that country but do spend money in that country.

Fourth, where's the money coming from? The business they derive their income from has to pay sales taxes too.

And finally, a vanishingly small fraction of people could actually do that, and it's not worth making the tax code a hundred times more complicated to target a tiny number of people who will still end up paying a huge amount of tax in other ways. The administration alone isn't worth the additional revenue; you'd spend more administrating the more complex tax code for everyone than you'd have any hope of recouping.