[charlesdm]

VAT is a tax on consumption. But it is only levied when you take a certain action with your funds -- i.e. consume it. You could also (re)invest and let your capital compound.

So yes, if you spend all your money to the last penny, that would be your tax rate. But many (higher income) people do not.

[sfe22]

But all your income is meant to be spent. All people invest so they get to buy more in the future, not for the sake of it. If you don’t pay VAT today, you will in the future.