I think you may have missed the part of my post where I propose refunding some base amount to everyone, which would address the concern you raise here.
I did miss that, yes. It will. I still don't see what is wrong with taxing income and, above a certain threshold, wealth.
Here's what I find objectionable about taxing income and wealth: If income were taxed at a flat rate, period, then I wouldn't have a problem with it. However, we have a progressive tax structure, plus a vast array of public assistance programs. That means that someone who earns $100k/year for ten years and then retires will pay
way more in taxes than someone who earns $40k/year for 25 years. It also means that you could retire and increase your spending, but pay lower taxes. That seems odd to me--someone spending more is arguably benefiting more from government services, so you'd think they ought to be paying more in taxes.
Another issue with taxing income is that it leads to the ridiculously complicated tax structure we have today, with all sorts of deductions, credits, separate tax rates for long-term capital gains, AMT, IRAs, Roth accounts, having to track cost basis, exemptions, depreciation, etc, etc, etc. In fact, the complexity of the code is a drag on the economy to the tune of
hundreds of billions of dollars in just compliance costs. A flat consumption tax does away with all the complexity that comes with taxing income. With a consumption tax of, say, 20%, I wouldn't have to worry about whether I have enough money in my taxable accounts and Roth contributions to enable me to build a Roth ladder. There'd be no RMDs, no pre-tax or post-tax stuff to worry about. I wouldn't have a need to double up on charitable contributions one year, and take the standard deduction the next year, in order to maximize my deductions. There'd be no income caps on IRA deductions, no worry about the Investment Order, etc.
Another issue I have with taxing income at varying rates is a more philosophical one: it is an issue that allows politicians to divide people against each other. For example, "We want more government spending, but we're going to make
those other guys pay for it! Vote for me!" If instead, the politicians have to come to
everybody with hat in hand and say "We want to implement Medicare for All (or Make our Military Bigger, or pass a big Infrastructure Bill, or whatever), but it'll mean VAT has to go from 25% to 40%
for everyone," it's a lot harder to justify. As it should be, IMO.
As for taxing wealth, I have several concerns:
1) if the goal is to increase government revenue...well, I've addressed that earlier. Sure, you'd get some
2) if the goal is to address wealth inequality, well, you're only pulling the folks at the top down, not lifting up the folks at the bottom (see #1)
3) taxing wealth is, as I said before, double taxation.
4) how do you define wealth? What gets included? Your brokerage account, sure. But does your house count against you? What about the small business you've built from scratch? Your car? Your college degree?
4) the vast majority of wealth is not cash sitting in a Scrooge McDuck vault. It's equities, real estate, that sort of thing. Let's say you want to tax 2% of equities and bonds over a certain threshold. The Law of Unintended Consequences is gonna bite you. Investors will expect higher returns in order to cover the increased cost. That'd be a nice blow to economic growth. Let's say you still want to do it. So a guy has to liquidate 2% of his portfolio. Who's gonna buy it? All the other multimillionaires out there are trying to do the same thing, and all the Joe Schmoes don't have enough money to buy them, so stock prices will take a massive nosedive, which...also hurts Joe Schmoe's investments.