"But under the current system all the taxes are embedded into the cost of goods anyways, so it still gets taxed once the prostitute spends her money."
Any tax, all taxes need enforcement. Why are you fixated on this poor prostitute? Let the poor woman ply her trade in peace.
Do you really think the federal government's need to track the individual income of each and ever worker is anywhere near as simple as collecting a sales tax?
The problem is the NRST claims some huge benefit, when the facts show otherwise. Both systems says the prostitute/drug dealer owes tax, either income tax or sales tax. Under both systems, neither pays the tax required, but if they do spend their ill gotten money legally, then both systems re-coup some of the lost revenues. The point was both systems are similarly cheated, and for someone to claim one system now taxes these people is a lie. Illegal activity remains untaxed activity under both.
And in reality, I don't think there is a huge difference. Every sales transaction is now a taxable event. Purchasers and sellers must keep an account of all their transactions. Purchasers may not have to report all those transactions, but they better be keeping all their official section 510 reciepts with all the seven peices of required information on it that prove they paid tax on all their purchases. For employees, a 1040 EZ form really is not all that much harder than the paper work they have to fill out to get their monthly rebate check. And if Purchasers do make a purchase where they do no get an official section 510 receipt, then they have to files a monthly report all those transactions and submit the tax.
And that is not even going into the complexities of dual-use items, which are used for both personal and business use. And then you have rules for converting business use items to personal use items. Then you have a huge debate over which items are business use items and which are personal use. The current NRST definitions are vague enough where everyone would be stupid if they don't set up a business and try to avoid a 30% sales tax. Certainly I can come up with a business where I use a car so I don't have to pay an extra $10,000 for sales tax.