It would be better than a blanket tax for sure, but still produces bad incentives.

That kind of system still encourages wealth hoarding, because it costs more to spend money than it does to save/invest it. We already know billionaires aren't just hoarding wealth to spend it all, because most of them only spend a fraction of it. They hoard it because there is a psychological mechanism that makes them feel like they just need a bigger number no matter what.

There's a limit to how much one person can spend on things they'll actually want, but there's no limit on just how high the number can go if they keep funneling more and more money into their bank and brokerage accounts, which means you effectively cap out the tax rate on billionaires.

In a system like that, if a regular person has $1,000 per month in money to spend, and spends $500 on goods that are still taxed, that's 50% of their income getting taxed. A billionaire might have a billion dollars, and only spend a few thousandths of that every year for a way better personal experience than that person spending $500. You might then only have about 0.1% of that billionaire's income getting taxed, while the rest rots in a bank account, never to be spent or become economically valuable to anyone.

The best tax system is one based on income, or better yet, including actual held wealth, because hoarding more produces less and less returns as time goes on, to the point that spending that money is more beneficial to that person than hoarding it and getting to keep, say, 1% or less of those earnings after taxes. (and even if they do keep hoarding, 99% of that money's going back to other people and programs anyways)

Spending that money returns it to the economy, which in turn provides more jobs, distributes that wealth to lower classes more than it would otherwise be if it just sat in a bank account, and is generally economically beneficial.

Essentially, an income + wealth tax is "hoard money too much and we will use it to benefit everyone", whereas a sales tax, even one limited just to nonessentials, is "if you don't choose to hoard your money and decide to spend it, then you gotta give a little back" Billionaires shouldn't get to decide if they're taxed or not, so why give them the ability to do so by tying it to if they choose to consume a given amount of nonessential goods?