That's what Herman Cain, the frontrunner for the Republican nomination for President, is proposing.
And it is just that simple. Any lower federal taxes that I end up paying by lowering my annual rate to 9% will be far more than offset with the 9% increase in sales tax on every damn thing I buy, ever. Quite easily put, my taxes will go up. A lot. And I'm not somebody who buys a lot of stuff on a monthly basis.
Business would flee from New Orleans, as the local and state sales tax rates are already 9%. That puts us into the 18% sales tax bracket as a municipality. Who will come here to spend money with that kind of overhead?
In the macro sense, people that buy the most stuff will be forced to stop buying so much stuff. If businesses don't have a market, who are they going to sell things to? While that's probably a good thing when it comes to ending our unsustainable economy (people buy less crap), and while that's a good thing for the environment (people buy less crap), this will be murder on every single business in this country that sells goods of any kind.
And that's before you look at what happens if the business cycle gets into a downturn: if sales are already weak, what happens when demand plummets further? Luckily, we already have those numbers.
You remember which governments depended on sales taxes to make up significant parts of their revenue stream? The states. The cities. And since the 2007 economic collapse, how, exactly, have those governments been doing?