I often wonder what people mean by "fair taxes". Maya MacGuineas writes that a "fair tax" burden is "commensurate with one's ability to meet it", and then goes on to write of the declining "progressivity of certain taxes" coupled with increasing regressivity of others. (So the deck is stacked, unless you define progress as taxing people at different rates. After all, one could argue that taxing everyone at the same "rate", i.e. percentage, is fair. 10% of a million is a lot more than 10% of 20,000. And then there are "degressive" taxes.)

Then she writes,

The fundamental requirement of any tax system is that it raise enough revenue to pay for government expenditures.

Yeah, but, what if the government keeps spending money foolishly?

She goes on to argue

The purpose of the tax code should not be to punish rising incomes or wealth creation; besides, there are limits to how much we can tax income and capital gains without undermining our competitive position in the world.

Instead, she says,

we should reduce taxes on wages by eliminating the regressive payroll tax that currently funds Social Security and Medicare. A payroll tax might make sense as a way to fund individual medical-savings or Social Security accounts—that is, an individual's payroll deductions would go directly into that same individual's retirement account. But as a means of financing a redistributive universal social program, the payroll tax too often ends up funneling the wages of middle- and working-class Americans to affluent retirees.

To encourage saving,

There are two approaches that might be effective in encouraging a higher saving rate. The first is to increase incentives for saving by reducing taxes on income and capital gains, while creating targeted tax breaks for saving, such as tax-sheltered IRAs. The second is to punish consumption more heavily—especially unnecessary consumption. We have already gone about as far as we can with the first approach; further reducing taxes on income and capital gains would further compromise the fairness of the system. But we have not ventured far at all with the second approach, which would allow us to discourage consumption without impairing the economy or making the system less fair.

Finally, she explains how a consumption tax might work:

Imagine a "progressive consumption tax" levied not on individual purchases but on total spending, as measured by the difference between what you earn and what you save. It might work like this: no tax at all on the first $25,000 you spent, a 10 percent tax on spending from $25,000 to $100,000, and a 15 percent tax on all spending above $100,000. In effect, basic necessities would not be taxed, and luxuries would be taxed at higher rates. This plan would be simple to execute. Each year taxpayers would calculate their total income from wages, investment income, and other sources, just as they do now. But then they would take a second step, subtracting the value of all their savings that year—such as savings accrued in a bank account, through a 401(k) plan, or through an investment fund (all of which are easily tracked, meaning that it would be hard for cheats to escape detection)—from their total income. The resulting figure would be the base amount to which the consumption tax would apply, at progressive rates. The less you spent, the lower your tax rate would be. Low-income earners would for the most part be taxed less onerously, since they spend less; and middle- and high-income earners would have an incentive to save their money, preparing for retirement and bolstering the country's long-term economic prospects. A national progressive consumption tax would go a long way toward recouping revenues lost from the elimination of the payroll tax, and it would make the system fairer, too.

I agree with that. Good luck on getting the American people to accept it, though.

Update

But what does she mean by "unnecessary consumption? That's a matter of opinion!