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I believe that H.R. 25 has some major appeal, however, I can't help but wonder how many people would start "skirting" the tax through underground economies and barter & trade. You know that some people already do this but I could only imagine the evasion problem getting worse as goods/services get marked up over 20%.

You know that some people already do this but I could only imagine the evasion problem getting worse as goods/services get marked up over 20%.

Actually to evading the NRST, is a higher risk lower gain situation than evading the income tax.

For one, under the higher marginal rates (more than 30%) and average rate(~22% federal) of the income tax clearly offer equal and more incentive for evasion while the risk of doing so is less. To evade the income tax, it is only necessary for one person to act by failing to report income.

After enactment of the NRST, the shelf prices of products are expected to fall approximately 20-25% from todays levels (do to repeal of business & payroll taxes and reduction of the costs of tax compliance). Thus the actual out of pocket costs to the consumer (NRST + newprices) remain at approximately the same level as we see them today, remebering that this total payment is out of your full gross paycheck, as opposed to the takehome(after tax witholding) we see today.

In order to evade the NRST, it take the complicity of two persons to achieve that end. The buyer in agreement with a seller. The more persons who are involved in an illegal enterprise, the higher the risk of exposure.

Finally, more than 75% of retail dollars flow through less than 25% of the retail businesses. The large business has the most at risk where tax evasion is concerned, few large businesses are willing the loss of their right to conduct business over failing to collect the appropriate tax from their customers. That being the case, the most of any tax evasion with remain among the same folks who do the most evasion today, the small business and individual.

Enforcement of the retail sales taxes are focused into a smaller segment of the total population than the income/payroll tax , raising the risk of detection under the NRST.

All factors taken together, I would expect to see a fall from todays 15-25% non-compliance levels to something no worse and most likely lower.

Finally, the NRST is not designed so much to give the government a break, as much as it is to favor the citizen.

As I stated to another earlier:

I am more interested in placing the first option and claim on how money is to be used in the hands of the citizen, as opposed to that of government.

The citizen gains in liberty, privacy and knowledge of how his finances are allocated between investment consumption and government. That empowers the citizen to perform his obligation of "Eternal Vigilance" that is the necessary adjunct to a functioning free society.

The financial aspects, especially as it regards any benefit to government, comes in a far second place to empowerment of the citizen.

Many of the reasons to go to a pure consumption tax were laid out by the founders,

in Federalist Papers #2:

"It is a signal advantage of taxes on articles of consumption
that they contain in their own nature a security against excess.
They prescribe their own limit, which cannot be exceeded without
defeating the end proposed - that is, an extension of the revenue.
When applied to this object, the saying is as just as it is witty
that, "in political arithmetic, two and two do not always make four."
If duties are too high, they lessen the consumption; the collection
is eluded; and the product to the treasury is not so great as when
they are confined within proper and moderate bounds.
This forms a complete barrier against any material oppression of the
citizens by taxes of this class, and is itself a natural limitation of
the power of imposing them.
Impositions of this kind usually fall under the denomination of indirect
taxes, and must for a long time constitute the chief part of the revenue
raised in this country." (Emphasis added).

The choice of a NRST as an alternative tax system, as opposed to a VAT which would have stronger enforcement characteristics, is visibility of the tax, along with the convenience and empowerment of the citizen, not the convenience and empowerment of the government.

[Montesquieu wrote in Spirit of the Laws, XIII,c.14:]

"A capitation is more natural to slavery; a duty on merchandise is more natural to liberty, by reason it has not so direct a relation to the person."
--Thomas Jefferson: copied into his Commonplace Book.

Patrick Henry, Virginia Ratifying Convention June 12, 1788:

"the oppression arising from taxation, is not from the amount but, from the mode -- a thorough acquaintance with the condition of the people, is necessary to a just distribution of taxes. The whole wisdom of the science of Government, with respect to taxation, consists in selecting the mode of collection which will best accommodate to the convenience of the people."

That's the attraction of the Value Added Tax over the a pure sales and use tax.

I believe that H.R. 25 has some major appeal, however, I can't help but wonder how many people would start "skirting" the tax through underground economies and barter & trade. You know that some people already do this but I could only imagine the evasion problem getting worse as goods/services get marked up over 20%.

There will always be some evasion under any system, and sales atxes are naturally self-limiting due to the reasons you point out. On the enforcement side, 10% of the retailers sell 90% of goods and services -- and there are far fewer retail businesses than there are individuals, so the number of points to watch is much smaller. Since the tax apllies to all goods and services, there's no way to "accidentally" ring something up as non-taxable, either. :)

Also, you seem to be under the impression that prices will jump with the sales tax. They probably won't. The NRST is a replacement for all the taxes currently layered into the price of goods and services, not in addition to them.