- Making it non-regressive, let alone as close to progressive as our current system, is damned hard. FAIR Tax-style check-cutting probably isn't enough.
- The tax would have to be high enough that black market sales would be extremely tempting. It's comparatively easier to monitor and regulate ~150 million workers, each with a small number of "tax events" per year, vs. hundreds of billions of taxable transactions.
- A sales tax has the potential to be at least as complex and distorting as the income tax, and probably moreso. Politicians likely won't be able to resist the urge to make favored products cheaper (or cheaper for favored constituents), and the levers available will be much more direct, as you won't have to wait until April 15 to see, say, your electric car credit.
Its not really important or difficult. The state I grew up in has a long list of poor people exemptions by industry. Everything in the grocery store except hot deli food is tax free, for example. Tuition, medical care, bunch of other poor people things all tax free... As a poor person the only taxes you'll likely ever pay are the 100% or so gasoline sin tax and sales tax on a car. 5% depreciation on a new car is a fraction of driving it off the lot, and for used, especially for poor people, there's a wink and nod that if you're not involving a bank just don't submit anything completely ridiculous, and they don't enforce sales tax at all on family sales because they know we'd just avoid it via gift tax if they cracked down and other than divorce situations you'll never get family members testifying against each other.
Its important to keep the tax rate reasonably low compared to the "real world poor folks" inflation rate (not the made up one). Another way to think about it, is I live in a civilized (non-california) area and our cost of living is much lower. So you can express our 5% sales tax as living about 18 months in the future, or as living about 1/20th more like Californians. Its just not a big deal.
Now if you want a euro style 50% then the big problem isn't so much the poor as all the people trying to evade that kind of tax rate. We already have plenty of problems with petroleum fuels and tobacco products, imagine those kind of problems with "everything".
As a European, I wonder what you're referring to. My aggregate total tax, including VAT (I'm in the UK, so the VAT rate is 20% for standard rated goods, but like in your case there's lots of zero rated goods; I believe the top VAT rate in the EU is 25%) is ~36% on a salary that puts me well into the "1%".
(VAT accounts for "only" about 4 percentage points of that, as the amount of my post-income-tax income that goes towards non-zero-rated products is not all that high).
Marginal tax rates in many European countries can be around or exceeding 50%, but you'd have to be ludicrously wealthy with a useless accountant to actually pay anywhere near that, even including VAT, unless you spend all your money on drinking and driving.
I fail to see how this could be complicated. Assume poor person spends 100% of their income and all of it is taxed, so send them a "psuedo-basic-income" check of whatever minimum wage is times the sales tax.
It's true you can't approximate every possible tax curve you might desire using the model of a flat sales tax rate + a flat prebate, but by varying the rate and the rebate size you can approximate enough curves for it to be interesting.
150 million workers have relatively little income compared to the top 1% who obtain a very large share of the income. They also have a lot more "tax events" and derive them not from wages but from capital gains.
We currently have 150 million workers and a middle class. Unemployment is going to have to be embraced when one janitor can clean 100,000 sqft building using a few very efficient machines, or a dozen workers can run a car manufacturing facility that produces a new vehicle every 3 seconds. At this level of productivity, which we are going to approach, the form of capitalism that assumes that those unemployed are a fringe group of people between jobs is not going to work. A new system is going to need to be developed, unless population is going to decrease at the same rate as productivity increases.
So the solutions as I see them are:
1. Make the government more productive so the tax wouldn't have to be quite so high. The government uses money in two ways: to run its internal services and to re-distribute the money. The former should be streamlined (making the IRS simple would be along those lines), while the latter can be reigned in by cutting spending to less needed services (e.g.: excessive military spending, tax loop holes, etc.)
2. Make the sales tax progressive by the type of item being sold. This goes hand in hand with your third point and can get complex, but the states already do this: food, clothing, and everything else are all taxed differently. Let's have a 50% tax on tobacco, and a 0.1% tax on food. Note that this is still more efficient than reviewing every single person's return and looking for exceptions.
3. Since the tax is national, there will be less problems than with the state tax in terms of determining where you have presence. Just charge the tax and that's it.
4. Issuing a refund at the end of the year does a person no good if throughout the year they cannot afford to buy food and shelter. To fix this, we need a minimum wage that actually lets someone support themselves. The amount should be re-evaluated yearly or if inflation jumps more than a regular percentage, and should rise with at least inflation. As we approach the productivity asymptote, basic income is going to need to be implemented as well.
If we're worried about the cost of living of people with incomes below a certain level, the best solution to that problem is a solution to that problem, such as an earned income tax credit, a guaranteed income, food stamps, health insurance supplements, and the like.
Almost all of the complexity comes from dealing with what to tax, not how much to tax it.
I also think that complexity is a justice issue since it favors those with inside knowledge, lobbyists, and the resources to have full-time tax specialists at the expense of everyone else.
This second point is a big deal. It's why we see headlines about how multinationals are legally paying ridiculously low tax rates. It's a headline because it's not fair on its face, despite how legal it is.
Obviously it could cycle out of control if the amount of money printed wasn't regulated. But it could be a decent method to cut no-value-add industries (IRS, accounting).
Job mobility could be higher if you didn't have to file with the government every time you got hired. So the worker would have more leverage over the employer if they did not keep wages sufficient.
Additionally, there are many untaxed workers right now that we would then be taxing if inflationary or single tax was used. Ex, waiters, other tipped jobs, sketchy corner store that only take cash, illegal immigrants who work under the table