Removing the Income Tax 

This is an idea I've thought about a lot over the last couple of years. I used to be more of a fan of the flat tax, but then my brother-in-law made a damn compelling case for a national sales tax, and pretty much sold me on the idea. Recently Virginal Postrel blogged briefly on it, in regards to illegal immigration, which brought it back to the front of my mind. So in an effort to get the discussion going, I thought I'd talk about some of the benefits of a national sales tax instead of the current income tax scheme.

Simplicity For Taxpayers: No complicated forms, schedules, tables, etc. No April 15th deadlines that everyone is worried about. In fact, since the majority of states already have a sales tax themselves, businesses are already setup to collect one for the federal government as well.

It Encourages Savings: Because you're taxed at the point of sale, rather than on your income, it automatically encourages savings. Everything you put in the bank and make interest on is not taxed until you spend it. In fact, because you aren't taxed until you spend it, there is more money available for you to gain interest on. No special IRA's or complicated 401K plans are required to avoid taxation. Just don't spend it, and you aren't taxed.

Black Market Money Is Taxed: There is no longer any money which is kept "off the books". Because the ultimate point of money is to spend it, black market funds are now brought into the open. Drug dealers who love to buy Cadillac Escalades, boats, and anything else are now being taxed, where before they weren't. Illegal immigration is now taxed, since illegals are now paid off the books (more on this later).

It Encourages Charity: Once again, since money you don't spend is not taxed, money you give to charities is automatically not taxed either. No complicated forms to fill out with itemized deductions. Just give your money away, and you don't have to pay tax on it.

It's Progressive: For all those liberals out there who love "progressive" taxes... the National Sales Tax is the most progressive tax around. After all, the point of being rich is to spend your wealth. So people who buys boats, and planes, and especially expensive mansions are taxed more than people who are simply buying clothes, food, and other necessities.

It Removes One Advantage to Hiring Illegal Immigrants: One of the reasons people like hiring illegal immigrants is to avoid all the paperwork involved in hiring someone. Illegals are willing to paid off the books, with no need for W-4's and complicated withholdings. By removing all that bureaucratic paperwork, so that every can be paid the same way, there is less of an advantage to hiring an illegal immigrant.

Granted it will increase the price on all goods throughout the country, but because the income tax is removed, you'll radically increase your income in one fell swoop as well. Not only that, but since more money will be taxable overall (due to black market money being taxed), the relative tax on people could actually decrease. Any thoughts?