In theory, things like EITC and progressive rates <i>should</i> account for the fact that low income people spend all their income on living, while high-income people accumulate capital that they can invest and create more income. Also, in theory, this approach is less intrusive than asking people to account for their spending and try to find which spending is actually a &quot;cost&quot; the way it would be for a business, and what it some frippery that should (for some definition of &quot;should&quot;) be taxed.