This will be one of the biggest problem areas, defining business vs. personal items. As a business, I could provide tax free autos to my employees. This would save 40% in state and federal sales tax on the purchase. In fact, everyone should be motivated to start their own business at the prospect of saving 40% on many of their purchases.
Exactly. At least one of my companies needs a new computer or two every year and a new TV and DVD/surround sound system (for employee training, don't you know) from time to time. ;^)
Also, the disparity between what would be taxable by the state and not the feds (and vice versa) would also be a potential problem.