>The thing I'd watch for is the giants that can afford tax
>evasion schemes.

If anything, I'd expect smaller businesses to be the ones that are more likely to illegally refuse to collect sales tax. Big places tend to get "noticed".

As for how it would affect small vs. large businesses, I assume it would affect them both equally.

American tax system in a nutshell:

1. Local + state sales tax. Where I am this is approx. 8.25%.

2. Local property tax. This is higher where I live because there is no state income tax. I estimate this is about 2% of the market value of my home, levied yearly.

3. State income tax. None where I live.

4. Federal income tax (including taxes on capital gains). This ranges from approx. 20% to approx. 40%. However, many deductions are allowed, so most people only pay federal income tax on a portion of their total income. I think my "taxable" income was something like 60% of my gross income. Long-term (over 1 year) capital gains are taxed at a flat rate of approx. 20%.

5. Taxes on corporations. No idea how these work.

6. Employee payroll deductions (to pay for Social Security, Medicare and unemployment benefits). Total about 15%, levied on the first ~$75k earned.

The FairTax would replace #s 4-6 with a 30% federal sales tax on *new* goods and services, plus send everyone a rebate check equal to the amount someone at the poverty level would expect to pay in federal sales tax.