"It is a great comfort to have you so rich" - Jane Austen, Pride and Prejudice.
Stripped down to the barest essentials, taxation works like this:
taxes owing = tax rate * tax base + lump sum taxes - income guarantees and tax credits.
The appropriate tax base, rate and income guarantee are the three fundamental issues in tax design.
Many economists believe that consumption is the best possible tax base (see this post, and the comments). Consumption is the best measure of what a person takes, consumes, and enjoys; consumption measures her welfare, how well off she is. It is thus the fairest basis for taxation. Moreover, these economists argue, taxing consumption has desirable incentive effects: it encourages saving; it discourages excessive, wasteful, environmentally destructive spending.
Consumption taxation could be achieved by allowing individuals to make unfettered contributions to registered retirement savings plans (RRSPs in Canada, IRAs in the US) and taxing all withdrawals from those accounts. Or relying more on sales taxes like the GST and HST.
There are well-known limitations to our ability to tax all consumption. What is produced and consumed in the home, for example, falls outside the tax system - something which is a problem for income taxes also. It can be hard to distinguish between business expenses, such as home offices or travel, and personal consumption.
Less often observed is that wealth itself generates consumption benefits, even if one never spends a dime of it.