“A national sales tax is such a nonstarter of an idea. The amount of tax evasion and fraud would be orders of magnitude greater than it is now.”
Really? How do you figure? The vast bulk of the states already have and successfully collect sales tax. There are also, by definition, a whole lot fewer people to chase when you’re only chasing businesses to remit a sales tax rather than the hundreds of millions of people who you have to chase for income taxes.
First, the sales tax rates of the states are generally below 10%; there is empirical evidence that once the rate goes above 10%, it becomes almost impossible to prevent very high levels of tax fraud and evasion.
Second, even with the rates as they are now the states have a miserable time collecting the taxes that, technically, are due, and the higher the sales tax rate, the harder it is to collect that tax. New York is a good example - the general sales tax rate is 8.375% (higher in NYC) - and the state has so much trouble catching the tax cheats and collecting the tax that they resort to the methods that are morally and intellectually reprehensible. Without going into a lot of detail (until and unless someone asks me to do so), if a small business in New York gets one calendar quarter behind on its sales tax payments, it is almost always the case that the owner should simply shut the business down and prepare to pay the unpaid taxes out of his or her own pocket for as long as it takes to do so - and it can take a very, very long time to do so because (a) the interest rate on unpaid sales tax in NYS is 14%, (b) unpaid sales taxes will become the personal liability of the business-owner, regardless of whether the business is a sole proprietorship or a corporation, and (c) the liability for unpaid sales tax cannot be discharged in bankruptcy - not ever, even if NYS chases you for 20 years (which is now the statute of limitations on collections, before this year, collections was effectively unlimited as to time, so long as NYS managed to hit a bank account of yours for a few bucks every 19 years or so).
Most other states are about as abusive of their residents as NYS is when it comes to collecting sales tax.
The severity of the techniques used to collect a tax are directly proportional to the difficulty of collecting the proper amount of tax and the ease with which the tax can be evaded or fraudulently taken; therefore, the fact that states use such draconian, offensive, morally indefensible methods to collect a measly 8.375% sales tax indicates that the problems attendant on collecting the correct amount of tax, and the ease with which the tax can be evaded or the revenues stolen by the retailer who is supposed to pay it over to the state are very, very substantial.
If you’d like more detail, as well as at least one proof-of-principal strategy for milking a large retail sales tax system, let me know.