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 a lot of money, they have flaws: they don't tax enough 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 type of tax called value-added tax for more revenue. This would likely be a better choice for the US too.