Earlier quoted context omitted.
I'd suggest replacing an income tax with a sales tax though. One 'punishes' earning, the other 'punishes' spending. Additionally you simplify enforcement by narrowing the collection points considerably. Talk about simple, you don't ever files taxes as an individual. That mixed with basic income is a good plan from my non-economist POV. I've sure someone far smarter that I can explain why I'm amazingly naïve.
From what I've read on the subject: Economically, you want to keep money flowing through the system as fast as possible. One dollar spent three times in a year contributes more to the economy than two dollars spent once. (I could imagine it even contributing more three dollars spent once due to participating in more transactions, but I don't know how you'd model that.) If you tax spending, you incentivize hoarding ca…
If your entire economy is propped up by increasing levels of spending, isn't that a serious problem that could explode?
Even if you tax sales and incentivize saving, people will still spend money. They obviously need to purchase basic goods, and people will still want luxuries.
So, will people save more? Probably. Will they stop spending and throw the economy into a downward death spiral? Highly doubtful.
As a followup, it has the added benefit of still getting tax money from the black market. If you are a drug dealer, you don't pay income tax, right? But you still buy goods and probably quite a few luxury goods. It also would capture tax money from the very wealthy if you drop all tax exemptions so they couldn't pay someone to find a loophole. It's not like they sit on their large sums of money and never purchase things.