The Fair Tax takes the regressive aspect into account with what it calls a "prebate." Every household would receive a monthly check equal to the average taxes paid each month for food and clothing. The idea of the prebate is to make life's necessities essentially tax free. Yes, if you decide to eat steak and lobster every night and wear designer clothing, the prebate won't cover your food and clothing taxes. But if you eat and dress as most people do, you'll only end up paying the consumption tax on the goods you choose to buy.
I'm all in favor of downsizing the government and eliminating the IRS seems like a great place to start.