If I didn&#x27;t know better I would think there was a conspiracy by the rich to convince people that consumption taxes are regressive because they know they&#x27;re the only way the rich can be made to pay their taxes.<p>Think about someone who has a billion dollars. Not income, already in the bank. Without a consumption tax, they can spend <i>all of it</i> without paying <i>any taxes</i>.<p>Now think about someone who has student loans or a mortgage (i.e. someone not rich enough to pay for it outright). With an income tax they have to pay income tax on the money they&#x27;re using to pay back the loan principal. Switch to a consumption tax and they don&#x27;t.<p>So where does this idea that consumption taxes are regressive come from? The theory is supposed to be that the rich spend less of their income than the poor. First small problem, that&#x27;s only true for the super rich. Someone making $120K&#x2F;year is pretty well spending it all on a big house and a new car and sending their kids to college. It&#x27;s the people who have a billion dollars and make ten million a year in interest who aren&#x27;t spending anywhere near that much.<p>But those same people also don&#x27;t have anywhere near that much in &quot;taxable&quot; income because they have fancy accountants and the investments they own don&#x27;t have definite values until sold, which they never are. So they can make a million dollars in interest without paying any tax, and then they can use a <i>different</i> million dollars in principal to spend on anything they like, also without paying any tax.<p>But if we had a consumption tax on cars and yachts and airfare, they would be paying that. So which one is the regressive one?