>Most states already use sales taxes for a significant portion
>of their income. Consumption taxes also have a long historic
>record of usage. I'm curious as you how/why you think people
>would conduct more goods/services "underground" than they
>already do to avoid paying state sales taxes.

Degree. Skirting state and local sales taxes doesn't give you a huge competitive advantage over the competition, and it carries substantial risk. It also reduces the pool of people who'll do business with you. But if the competitive advantage were much, much bigger, more people might consider it "worth the risk" to move their business to the black market.