Here's a story with some info on the status of Representative John Linder's proposal to eliminate the IRS and institute a national sales tax.
Get your Tim Geithner TAX CHEAT! stamps!
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Off topic, but I refer to printed news reports as "articles". But considering the creative slant the MSM seem to put on the news, perhaps "stories" is more appropriate.
With the IRS gone, who will collect the National Sales Tax?
The "prebate" system makes it unworkable, in my opinion. A bureaucracy must be established to select recipients. Why not exempt foods including bottled water (I admit that the definition of "food" can be problematic) and charge the tax on virtually everything else?
BB: There's a problem that can create some new jobs to replace the displaced IRS people. :-)
I agree with what Morenuancedthanyou said: it's easy enough to say "don't tax food," but it can be really convoluted defining what is and isn't "food". Are potato chips and soda food? Are spices food? Are dietary supplements food? Is edible underwear food? What about staple sundries like toilet paper, should they be taxable? In CA we ended up with a convoluted system that left taxable items sitting right next to nontaxable items on the grocery store shelves.
Still though, as flawed as that is, it's a better idea than "prebates". To give prebates would involve having a database of citizens and addresses or bank account numbers to send the money to. Would prebates be given to illegal immigrants? How would they be given to the homeless? How would the right amount be given to families of various sizes? Sorry, but it sounds to me like you'd need a Big Brother to pass out the prebates, and that's more than I'm willing to vote for.
State sales taxes have extensive law on what counts as food. It generally turns on how it's packaged: If it's packaged so that it will be taken home and eaten, then it's not taxed. But if it's taxed to be eaten on the premises, then it's taxed.
Sales tax law isn't new; it's only new to you guys. Tax specialists have been grappling with it for decades, or really centuries.