Agreed. But you miss one major point. If I am creating wealth I am not spending 100% of my income on goods and services. I am only spending a portion of that income. The portion that I save to create wealth compounds tax free (faster) and the portion that I spend generates the tax revenue at my convenience (over and above the poverty level).
As it is now I am penalized for creating the income that creates wealth and I am penalized for creating wealth from the remainder of that income that I have not spent. Even if I utilize the government's frickin' benevolence at letting me put only a statutory amount of money away tax deferred I still must pay taxes on it when I take it out. And don't give me that "your taxes will be lower when you retire" nonsense. If I am successful in creating wealth I should have a lot of income when I retire.
As it is now I am penalized for creating the income that creates wealth and I am penalized for creating wealth from the remainder of that income that I have not spent. Even if I utilize the government's frickin' benevolence at letting me put only a statutory amount of money away tax deferred I still must pay taxes on it when I take it out. And don't give me that "your taxes will be lower when you retire" nonsense. If I am successful in creating wealth I should have a lot of income when I retire.But the wealth is worth less because you will be taxed when you spend it. You will get a higher real return under a consumption tax (any consumption tax including a flat tax), but it's not as great as you think.