[kevkrom]

A guy is making $50K, say, and instead of paying 20% in income taxes, he has to pay 20% in sales tax. Is he going take anything less than $50K from his employer? -- no way. So the hidden/embedded tax is still there

Sorry for a second reply... I just read it again and saw a different point to make. If the guy is making $50K, his employer is currently paying $53,825 for his payroll, because of the "employer's share" of the payroll tax (7.65% "shares", 15.3% total). His employer would immediately save $3,825 while the employee would still get his entire paycheck.

[expatpat]

Nice try, but it doesn't hunt. Where is the money coming from to make up the missing income to the Feds? It will be rolled into the sales tax, of course, and still be embedded in the employer's costs.

[expatpat]

while the employee would still get his entire paycheck.

If the employee is only getting the same paycheck, then he's getting screwed, because he himself has to now pay the employer's share of the FICA tax, which is now in the sales tax. See #60.