First there would be no withholding. Make it a quarterly payment that the individual writes a check to the government.
If people have write a check to the government every four months they will very soon have a reality bomb go off in their head as to what government is costing them.
This would be the least costly way to collect taxes. A One page form to calculate your income. A simple table to calculate the taxes owed. Send in your check and you are done.
The pressure to shrink government and cut taxes would be enormous.
The sales tax does have the advantage of that you can lessen your tax load by not spending money but this is also a loop hole in that you can also avoid taxes by buying black market or second hand goods. There is also bartering for services that can avoid taxes.
The Federal government would seek to suppress these markets or find a way to tax them (the states lately have been trying to do this).
The effect of these efforts suppresses the freedom of the market place. I would prefer to find ways for government to secure revenue that puts pressure on government to contain itself rather than to insert itself in to the daily lives of the citizen.
Certainly you can design the sales tax system so that in theory the money is remitted first to the state government but this would be a short term effect and in short order the Federal government would insert itself in to the system to ensure that taxes were being properly calculated and submitted.
That still keeps many out of the ‘process’ (same as today), it still requires a Dept. to track/audit/etc. let alone allows the re-start of ‘tweaking’ and loopholes. It still affords no FREEDOM to NOT be taxed. And, income is STILL the worst way to pay for (true) gov’t functions.
Gov’t should NEVER be the 1st one in the collection line after payday with its hands out...an income tax is just that.
A sales tax is not some ‘black market’ loophole. You’re right though, it DOES allow one to be taxed or NOT. I would NOT allow to some group vs. another (even if they COULD get a loophole, EVERYONE could partake...none of this ‘in bracket XYZ’ crap).
2nd hand and bartering SHOULD be actively used, yet another way to get back to our roots.
The Constitution was to be the ‘constraining’ force of gov’t. You actually believe market forces would do better in some way (cough *the Fed* cough *gold standard* cough)
The remittance CAN be over-taken, in time, I’d bet. Though, IMHO, it’d be a hell of a battle when people were shown what economic freedom feels like again.