Interesting that no one ever talked about the alternative to Internet sales tax, to solve the competition problem: removing sales tax, and replacing it with use/income/property/head/etc tax.
Hence inventions like Canada's "goods and services" tax.
The cost of a house has doubled in 15 years (and housing is currently spiking again while real unemployment is 14%, thanks to the Fed's massive housing inflation). The cost of gasoline has gone up 3 to 4 fold in the same time frame. The cost of groceries have followed a huge inflationary curve over the last 15 / 30 / 50 years. Ditto the cost of a vehicle.
Rich people can shield their money from inflation (easily in fact), average or poor people cannot shield their incomes from inflation. That simple fact is responsible for a huge destruction in standard of living in the US. Incomes have not even remotely kept up with inflation.
Incomes are stagnant or declining in real terms we can agree on that. While low interest rates and easy credit are an element of that, why blame it on the "Fed" when easy money is happening the world over? After all, it is easy for average or poor people to shield their income for inflation, it is called getting a raise. Problems arise when the economy and tax system values capital over work - which was my original point.
You can partition by B2B, B2C, B2G, whatever, but at some point it has to stop being a pyramid scheme, and that point is with the consumer who are generally able and willing to consume more if taxed less.
Before you can consume anything you have to first produce something (unless you have credit, and that won't last very long unless you have produced something or are going to).
Try consuming before you produce. It's a logical failure that modern economics tries to pretend doesn't exist (and we can see how far that has gotten many economies today).
For obvious examples of production over consumption, see: China, or the US before hyper consumption took over a few decades ago. Savings + capital investment + production = wealth. Lack of savings + spending + lack of production = poverty and debt (aka modern America).
All that does is mean that the fruits of a producer's labor generates a lot more wealth for other people, at a lower tax rate. That necessarily means we have to seek higher salaries, which requires higher investments, which necessarily means gains will be smaller, resulting in less ROI for investors.
Placing more of the tax burden on the people building value doesn't make much sense, since they have to live, too.
My point was emphasis on production is extremely lacking in the US today. Presidents pay lip service to it (and absolutely nothing else), meanwhile China is beating our pants off by actually focusing on it. My other point was, production is more important than consumption (because the one must come before the other, not to say you don't need consumption of course).
You turn on the TV and every talking head says the same thing: consumption is 2/3 of the economy. So in their world we need more consumer spending - more people buying junk they don't need from China so China can get richer while we get poorer. When you put that into a logical context, it's comically absurd. Where do those talking heads think the money to consume comes from? 100% of it comes from production or credit, with the ability to spend being a left-over fractional fruit of production (aka the profit from producing something).
But it doesn't really work that way. Producers are typically the majority of the consumers as well, and that's money that ends up back in companies as capital that ultimately is more valuable than investor capital, since it's renewable and with a profit margin doesn't gain equity and increase in value like investor capital. But in a sense, then consumers are investors, just a different type, but they're being taxed more highly, so they can't afford to consume as much, so they invest less capital in companies.
There's a cost of living, too, that you can't ignore. If producers contribute more of their earnings to taxes and have less to live on, then the margins are smaller and they necessarily need to seek higher income to offset the taxation -- which results in their production capital becoming more expensive, which makes investor capital less potent as well.
I don't see a good argument at all for taxing people who work for their money, because all of those argument circularly apply to the working people as well, and logic would dictate that it impacts the value of capital and ultimately leads to fewer jobs. Lower producer taxation and higher taxation on investor gains may reduce the available capital (but not necessarily the amount invested) but it also reduces the cost of other forms of capital, while increasing the amount available for investment from producers. That means a much larger class of people have more room to live well and spend, versus a few living well and spending. To put it really simply: higher income taxes and lower investment return taxes results in financial segregation while the opposite tends to destroy it. It's clear, given that basic fact, why some argue for or against it. It also changes the types of investments companies need to seek, which may or may not be a bad thing.
There are states with no sales tax, but I think you'd have trouble persuading those that have one to give it up.