Each industry would have different tax rules for goods and services. It would not be fair to tax necessities like food in the same way that recreational drugs and gambling are taxed.Ok, but that's far more regressive. Is that your intent? That is, a VAT would necessarily shift the existing tax burden from the wealthy to the less wealthy who may pay no federal income tax. As the lower incomes can not avoid purchases for housing, transportation and food, they'll incur the (federal) sales tax.
My preference is a federal tax on the state governments alone, requiring increased state taxes but completely eliminating any kind of personalized federal tax, income or otherwise, and thereby strengthening the US federalist system.
If someone works their backside off and earns a lot in a fair manner, why should they suffer from having their hard work punished by getting a tax of over 30/40%? If these people own businesses, they are employing people, and that has a domino effect.
The way things are going now, some of these elites are paying less tax than the janitors!
With regards to your first sentence, you can define taxes based on necessity and luxury. Standard food products should not taxed as high as say a bottle of really expensive wine. Same with housing: if you want a ridiculously extravagant house, then it should cost you more.
I do however, agree that a no income tax system would have to be a bit more thought out. Defining the difference between necessity and luxury is a hard one because it is subjective. But it does allow the consumer at the end of the day what to spend all of their income on, and to me, that is in favor of freedom for the consumer.