A VAT would be a “nightmare” for the IRS.

A unique feature of the federal tax system in the U.S. is its lack of a consumption tax component. Most other countries — developed and developing alike — use a value-added tax system, which adds incremental tax payments on goods and services at each stage of their production.

“For historical reasons, we've left consumption taxes — the taxes you would pay at the cash register — to the states through retail sales taxes,” Gentry said.

Economists are often frustrated by the lack of a value-added tax (VAT) in the U.S., which is seen as being more efficient than taxes on personal income.

“They distort economic activity less because they don't affect investment,” Thornton Matheson, a senior fellow at the Tax Policy Institute, told VOA. “They don't tax business profits, so they don't affect investment. They can affect labor decisions, but generally speaking, a VAT is more efficient than labor taxes, like the personal income tax, payroll taxes and Social Security taxes.”

Administrative ‘nightmare’

As much as they believe a VAT would be a better way for the United States to raise some of its revenue, experts acknowledge that the political effort involved would be enormous.

In addition to finding a way to replace or reallocate the revenue that consumption taxes already deliver to the individual states, it would require rationalizing the disparate systems that have developed over the years. Some states have no sales tax, while others tax different things.

“It would require harmonizing all the states, and they don't want to harmonize,” said Gentry. “New Hampshire doesn't have a sales tax. Tennessee taxes food, but Massachusetts doesn't tax food. And so, there are all these complicated choices.”

He added, “And then you start selling goods online, and it starts getting to be a nightmare.”