Assume that in the United States the subnational units of government (states) are not willing to give up their power to define their tax base, their penalties, and so on, and that therefore the states retain their diverse single stage retail sales taxes. What are the differences between federal adoption of an EU-style VAT (a transaction tax) and an addition or sales-subtraction VAT? Consider the effect on the RST base, the ease of operation of the federal alongside the state taxes, and the state’s receptivity or opposition to the federal levy.