 While many economists and tax experts support a consumption tax , problems could arise with using a retail sales tax rather than a value added tax ( VAT ) . A VAT imposes a tax on the value added at every intermediate step of production , so the goods reach the final consumer with much of the tax already in the price . The retail seller has little incentive to conceal retail sales , since he has already paid much of the good 's tax . Retailers are unlikely to subsidize the consumer 's tax evasion by concealing sales . In contrast , a retailer has paid no tax on goods under a sales tax system . This provides an incentive for retailers to conceal sales and engage in " tax arbitrage " by sharing some of the illicit tax savings with the final consumer . Citing evasion , Tim Worstall wrote in Forbes that Europe ’ s 20 @-@ 25 % consumption taxes simply would not work if they were a sales tax : that ’ s why they ’ re all a VAT . Laurence Kotlikoff has stated that the government could compel firms to report , via 1099 @-@ type forms , their sales to other firms , which would provide the same records that arise under a VAT . In the United States , a general sales tax is imposed in 45 states plus the District of Columbia ( accounting for over 97 % of both population and economic output ) , which proponents argue provides a large infrastructure for taxing sales that many countries do not have . 
