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A study released in Washington last week showed that rich people have become even better at hiding income from federal taxes. The problem has grown so complex that the Internal Revenue Service seems helpless.

This mainly has to do with increased off-shore activity and a growing use of bogus transactions to leave the false impression of losses.

Liberals instantly blamed the Republican culture, which makes no concession to nuance or mitigation in preaching that profits are virtuous and taxes evil.

The head of the Internal Revenue Service told the Senate that he blames it on the global economy, which opens new ways for money to pass stealthily over national boundaries.

If the purpose of a tax structure is to collect a suitable sum for essential government operations based on the principle that what the government collects should be based on the citizens' ability to pay, then a true income tax levied in progressive rates -- meaning ones that go higher as income levels rise -- is the best answer.

But now the income tax system is rendered unfair, supposedly irreparably, because cheats have found ways to hide high levels of income and national laws are left moot by the sophisticated way money moves around the world.

Some say we should transfer to a flat income tax. But that wouldn't locate illegally hidden income. Worse, it's horribly unfair. You take 10 per cent of a wealthy man's income and he has plenty left. You take 10 percent of the poor working man's income and he must cut back on groceries or medicine or shoes for the kids.

One answer would seem to be a national sales tax. If we can't fairly tax what people earn, then maybe we can come closer to fairness by taxing what they spend.

Liberals tend to recoil at the notion, since a sales tax is regressive, meaning inordinate in its effect on low-income people. The poor man has no choice but to spend all he has on necessities while the rich money can save and invest.

That's precisely why we ought to put our heads and technologies together to design a progressive national sales tax, based on ability to pay.

Food, medicine and basic utility services like electricity, gas and water would be exempt altogether, of course. After that, there are several ways you could go:

1. Items purchased at retail could be taxed at variable rates based on either their price or their nature. A used Chevy pickup could carry a lower sales tax rate than a 2007 BMW 700 series motor car. A lawn mower could be taxed at a lower rate than an annual lawn maintenance contract.

2. A percentage of prices for household essentials such as stoves and refrigerators could be exempted.

3. We could all pay the same sales tax, but get rebates based on income levels.

4. You could calculate what you spent in a year by subtracting what you'd saved from what you'd earned. A flat tax on that remainder, which some conservatives advocate, would be as unfair as a flat income tax. A poor man might lose his savings to a bad automobile transmission. But you could get around that inequity, perhaps, by applying progressive rates.

What about those perfectly legal and rational income tax deductions for middle-class people, for home mortgage and charitable contributions? They enhance the home-ownership dream and keep vital charities flush.

We could keep those. We'd report them by April 15, either in concert with the spending report or on an Annual Sales Tax Refund Form.

By the way, we might set these sales tax rates high enough to generate more money and cut into the deficit, thus reducing our vulnerability to Chinese, Japanese and Saudi ownership.

A tax increase? Yes, but only for some people, such as the ones who have been cheating.

John Brummett is an award-winning columnist for the Arkansas News Bureau in Little Rock and author of "High Wire," a book about Bill Clinton's first year as president. His e-mail address is jbrummett@arkansasnews.com