States fail.

What works on a national level in Europe may not work on the state level in the United States. If one state adopts a VAT while neighboring states do not, the inability of states to tax purchases from some out-of-state sellers will mean that some value added won’t be taxed, and sales made to other states will create the same problem. Put another way, a VAT cannot usually work in one state without a lot of help from other states.