Scott Sumner argues that consumption is a much more reflective variable than income when evaluating the level of economic inequality in society. Accordingly, a progressive consumption tax is more effective than income tax as a response if the goal is to limit inequality.
A progressive consumption tax is somewhat difficult to imagine, however, as standard consumption taxes are regressive in theory. I am not sure exactly what Sumner has in mind for a progressive consumption tax but one such scheme was explored by economist David Bradford. His idea was to tax a business’ cash flow at a flat rate and wages at a progressive rate (X Tax). In doing so, the non- distortionary benefits associated with a consumption tax or VAT are preserved.