So what the local school district is going to collect my federal income taxes from my out of state employer? The DMV collects it when I register my car? What if I don't own a car?

It also means there would probably 50 or hundreds (maybe even thousands?) of different processes to report your taxes, with each of these different tax authorities wanting to do it their own way.

I don't see how that makes it any better.

Not every state collects income tax. This would also violate anti-commandeering constitutional principles embodied in federalism.

That was the fundamental weakness in the articles of confederation, the feds were funded by appropriations from the states.