If you read the Scott Sumner link I provided above, you&#x27;ll realize why a consumption tax is actually the tax which doesn&#x27;t favor one over the other.<p>The main reason is that investment is merely delayed consumption (as you note above), so the consumption tax hits everyone equally regardless of whether they consume or invest. However, a capital income tax is <i>additional</i> taxation that applies only to the person who invests.