Robert,

I look forward to hearing what your friend comes up with on her thesis.  It is a darn complicated issue.  We of course have a blended system of consumption and income tax now.  The Fair Tax position seems to almost ignore the state and local income and consumption taxes.  It would also cause a big problem with tax free municipal bonds, causing higher costs for local schools, roads, etc., necessitating higher local tax rates.

I quite agree with your argument that initiating a federal sales tax would not eliminate the federal income tax.  I was in England in 1980 or 81, when Margaret Thatcher introduced the VAT tax as a replacement for the income tax.  They now have both.

I was reminded of a quote from Jean Baptiste Colbert (Finance Minister under Louis XIV) while reading this thread.  "The art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing".