for tl;dr—this is exactly the type of reaction i expect from those who don't stop to think deeply before punching out a response. there is no real content in your reply, only distraction.

In other words, you would replace the IRS with the PRS (pre-revenue service)?

no, i would abolish the IRS and repeal the whole damned tax code and start over. if PRS is what you would call it, i am partial to http://www.prsguitars.com/

And Main Street with the Back Alley, where you pay no taxes at all?

used goods would not be taxed since they were already taxed. and back alley deals will always be there—so what. better to keep however many million companies in line than 300 million people plus however many million companies. it lowers the tax burden, which is more efficient, which swamps any extra back alley deals that may take place under a consumption tax than the current labyrinthine code.

And incentivize export businesses over domestic businesses (b/c exported goods are never taxed)?

you do understand that we are a net importer of goods (though far and away a net exporter of ideas)—this means that we consume more goods at home that are not made here than we make and send abroad. i'm no rabid proponent of balanced trade, especially since our ideas are worth far more than a million trinkets from emerging markets, but making our goods more competitive in a global market can foster actual manufacturing jobs (remember those?), especially when the cost of labor in the east starts to be less of an advantage for those countries.

nevermind that we have an economy that relies mostly on non-exportable services and manufacturing has by and large left our shores, on to the highly flawed rhetorical question to which i must respond: a hypothetical export company has to pay taxes on equipment and supplies to do business, and has to employ people who purchase goods and thus pay taxes, only those items which are non-finished goods are not taxed if exported. most primary and many secondary goods are non-finished goods (think rubber for primary and tires for secondary—the tires on the new vehicle are taxed as part of the whole vehicle, the tires you by at tirerack are taxed when you buy them).

now imagine a global brand that still has manufacturing in the US as well as in other places around the world wants to build a new factory that serves north america. it might build in mexico, where the lower cost of labor offsets the higher cost of shipping and dealing with another imperfect government, then all of the goods it sells to the US (it's biggest customer) will pay taxes to the US and all the goods it sells in mexico and to canada pay NO taxes to the US. now imagine the scenario that the company decides to build here in the US—it pays higher labor costs but can keep a closer eye on manufacturing that makes it worth it. it employs several thousand people, pumping a quarter of a million dollars into the pockets of americans that end up supporting many other ventures that have no relationship to that company. and guess what, it pays NO taxes to the stuff it sells in mexico and canada. which would you prefer? oh, that's right, option 3 where said company never bothers to consider the US because it would pay tons of taxes on those goods sold elsewhere, all the while lobbying to congress for a tax break.

And over-incentivize capital investment even more grotesquely than it is now with a mild capital gains preference?

first, why should anyone ever be taxed for investing in the future?

second, do you understand that in this model, the investment would fund the purchase of goods and services which would employ people and pay taxes—around the world, not just in the US? do you understand that the benefit to the world of more investment is greater than houses of cards sometimes built with that investment? do you know that the fruits of investment has raised the standard of living such that i can type something of a didactic diatribe via a high quality laptop to some stranger that doesn't understand economics.

third, the capital gains is a clusterfuck, like everything else dealing with taxes.

There's a reason the Fair Tax was DOA

tell that to the people who are still supporting it. and if it does eventually become DOA, it'll be because of the beloved lobbyists and special interest groups

It's an over-engineered solution that's worse than what we have right now.

to which i can only respond: http://www.fourmilab.ch/uscode/26usc/www/contents.html
remember, that's just the table of contents.