The American retail sales tax is being considered as a way to tax spending instead of income. While state and local sales taxes bring in money, they have flaws as consumption taxes. They don't tax enough household services, exempt too many purchases, and tax too many business expenses. To replace the federal income tax, sales tax rates would need to be much higher, causing more problems. Most countries use a different tax called the value-added tax for indirect consumption taxes. This would likely be a better option for the US too.