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I can not see how this would reduce, rather than increase, the tax collecting bureaucracy.
How do people accommodate for the massive shift required in collecting and record keeping? There is no way to keep people, like savers, from being burdened by the lag time in the economy change, without more bureaucratic growth and stupidity, as far as I can see.
Also, in a representative gov't it is a certainty that some good will be exempted, and then some more, and then some more...
I think that smugglers will boom - sure, they may have to pay taxes on things they buy, but if they are willing to sell without taxing, they will, a whole barter smuggling economy is bound to spring up, making the current underground economy pale in comparison. How will the feds stop this form happening? Will they be keeping a record of every receipt you turn in for your exemptions?
What happens, if we push to have a system like this put in place, only to find it worse than the one we have now? Will the gov't not say, this is what you asked for - much like similar 'misunderstandings' of the tax situation in pre-Revolutionary America. Such an upheaval could lead to massive disobedience and rebellion, as it did before. How would we resolve it?
I don't like the current system, but I am not sure that tossing it for the potential evils of one we do not understand is the right idea.

Mercy, Mercy.

Your post covers a lot of ground. I was a skeptic and started with Boortz's book. I continue to research the details both for and against the system.

Best I can tell you is to start where I did. The tax burden part is the one that is most obvious and if you pay taxes and "...can not see how this would reduce, rather than increase, the tax collecting bureaucracy," than nothing I can tell you is going to be comprehendible to you.

As far as stopping cheaters, it is again obvious to me that it is very easy to cheat our system today and is done legally and illegally to the tune of about 20%. I don't know how much worse it could get, but if you only need to look in one place (retail), then it has to be easier to police. That is just my ridiculous opinion.

I can not see how this would reduce, rather than increase, the tax collecting bureaucracy.

It seems that it would vastly increase the bureaucracy. Someone or some committee has to decide exactly what is "new" as opposed to "used" and how does "income" differ from "service." The current IRS and state tax guidelines could be expanded to do this.