Re:is software akin to solid state machinery? (Score 1)

The various loopholes and deductions that can be found sometimes significantly reduce taxes-paid. since the wealthy pay more taxes, they have more of an incentive to find such reductions where they can. In extreme cases, this can make the current U.S. tax system non-progressive, but I doubt that it can make it regressive--the middle class still pays a larger percentage of income in taxes than does the lower class.

The problem with a national sales tax, even with exemptions, is that it creates a distortion in the market. The tax increases prices seen by the consumer, messing up the market equilibrium. The increased real price decreases the quantity purchased by consumers, harming businesses and actually decreasing income. The effect of a sales tax is a dead-weight loss in the economy, a market imperfection that hurts both consumers and producers.