incremental to the current system. Even a VAT or national sales tax or Carbon tax was proposed as an addition to what we have right now.

We both went through the Reagan Reform which I think was the best piece of tax legislation in my lifetime. And under Reagan we also made the last material changes to Social Security and Medicare revenue. But even those were done while maintaining the overall structural and approach we have (taxing income). I welcome more radical alternatives, but I think we will not be able to address them - either at all (due to the complexity and Congressional makeup) or in time to address the next 10-15 years when we face the greatest fiscal challenge. Plus, making significant but incremental changes are much easier to predict in terms of revenue raised. Radical changes will inherently be less predictable. I worry about under-putting and making things worse.

"The art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing.”

-Jean Baptise Colbert, Finance Minister to Louis XIV

Taxing consumption is pretty common. We have a sales tax here in Maryland. It has its good features (encourages saving in a way) and bad features (regressive).

Would this include all consumption? What, after all, is "consumption?"

Is buying a home one will live in consumption? If yes, this would raise the effective price of a home by 20+% in taxes. Home owners would be the ones penalized because if the total price stays the same, that 20+% is coming out of their hide. If homes aren't taxed at title transfer, what about the lumber that goes into them? Costs go up on new homes putting pressure on builders.

I'm not taking a position on the "Fair" Tax, just reacting to the title. Fair is in the eye of the beholder.

PS ... why not both?

included a prebated stipend for everyone which offset the tax burden for a pre-determined portion of spending to offset the regressive nature of a consumption tax. So if the cost of the tax on food, lodging, transport at the baseline level is $300, each month all individuals get $300. Lower levels of consumption result in savings, higher levels get taxed equally regardless of income level.
Since it is done at the point of transactions, there is no longer a distinction between business, individual, investment.

A benefit is that it directly pegs tax revenue to the GDP - there is less need to jack with tax rates, since revenue floats up as GDP grows.

You could look at the prebate as a form of UBI -- ie the tax system by default partially subsidizes the cost of living for all residents.

The proposal floated in the 00's also deals with your concern about the increase in prices. First - the taxes are already included in prices - if you are running a business, and you are paying taxes, you set your prices to cover that part of your cost of doing business. Second, since the Flat/Fair Tax is the source of revenue, all payroll taxes and deductions go away - it is not on top of existing taxes.
In any event, all of the items listed in the original post will have an impact on someone, since it means more money being taken out of the economy for use by the government. If you want to increase revenue, someone is going to pay more. The question is whether you make it broad and simple or narrow and complex.

What is not fair is that the tax code is incomprehensible. The people who wrote it don't understand it, the people who administer it don't understand it, and ordinary citizens don't understand it.

Local real estate taxes.

years ago. A lecturer came in to defend Pritzker’s proposal for a graduated income tax, and told me that it was “fairer” than a flat tax. I asked him by what measure, and he babbled about how it has been studied. I pressed the issue and asked him to explain to me how “fairness” is objectively measured, and more specifically, if Person A make $500K/year and pays 5% of that, or $25,000 in taxes, and Person B makes $50K, and only pays $2,500 in taxes, how is that objectively “unfair” to the person paying 1/10th of what the other guy is paying? One can argue about policy, but don’t try to sell me on objective “fairness.”

...isn't so much to compare what the high earner pays in taxes to what the low earner pays; but to consider impact that each additional dollar of tax has at various income levels, given the generally known costs of living.

If you have a family of four and AGI of $500K and have spendable income of $475K after taxes, you have covered the base costs of living far more comfortably than the person who has $47,500 left after taxes or about $4,000 a month. If you kept to the ratio of 30% of gross for rent, that would leave $1,200 a month for rent for the low earner and $12,000 a month for the high earner. A family of four in DuPage is going to have a very hard time finding housing for $1,200 a month.

Other everyday taxes are regressive, anyway, such as the sales tax.

To you last point, I believe that there is no such thing as objective fairness, any more than there is objective value for real estate (a taxpayer's appraiser I'm thinking of liked to talk about the "intrinsic" dollar value of the real estate, which is a fiction). Fairness in public policy is what the greatest number would agree to be fair.

...I suppose it'd be simpler to say that a flat tax has a disproportionate impact on lower incomes.

I guess there are two issues: (a) the definition of progressive/regressive and (b) the justification for progressive taxes.

If the taxes paid by an income group as a percentage of that income rises with the level of income the tax is progressive. If this falls as income rises the tax is regressive. Of course the categorization depends on a calculation of who actually pays a tax and economists have their own way of doing this.

The justification for progressive taxes is not usually based on fairness. Economists find this to be a slippery concept. The argument is utilitarian: Progressive taxes produce less pain for a given amount of revenue raised. The idea is that the reduction of utility (pain) caused by depriving someone whose income is $200,000 of $50,000 worth of consumption is less than the reduction of utility caused by depriving someone whose income is $40,000 of $5,000 worth of consumption.

Said in reverse, going from 50K to 45K has a larger negative impact than going from 250K to 245K. Maybe 50-48 utility lost equals 250-245 utility lost (numbers I picked at random) so it maximizes utility to tax the higher earner more on the margin, no?

Is a VAT considered regressive, progressive, or neutral? I honestly don't know, but my gut says "neutral" since it's based on consumption, not income. What's the expert view?

spend a larger percentage of their incomes on taxable goods

Better concepts include a refund or "pre-fund" of the tax value of a given standard of living, offsetting the basket of food, fuel, etc.

People with low incomes save less. That's the basis for the regressivity.

Yes. I guess you could wed a negative income tax to a VAT and claim that the combination is less regressive or not regressive but the VAT part is still the VAT part.

the concept from the mid-90s under the "Fair Tax" label did not have a 'non-taxable goods' category. If you bought something, the transaction was taxed. If you paid for a service, the transaction was taxed.

Monthly Universal Basic income voucher pre-pays the cost of basic goods and services, so low income has a net zero tax burden at worst, net tax income possible.

Prompted me to go online (because the answer surprised me), and I see your answer stated verbatim in a Tax Policy Center piece on this question. I hadn't though it through and was curious about the data that lay behind the answer, but the TPC answer made it quite obvious without the data.

service as we can possibly afford, with someone else's money.