This article compares the VATs in the European Union and the state sales taxes in the United States. The article first describes several key characteristics of an ideal sales tax and notes the inherent difficulty of satisfactorily implementing sales taxes levied by local governments. The article next explains the basic operation of the two types of sales taxes, and then describes the structural defects in the existing US retail sales taxes and the EU VATs, the economic effects of the defects, the inherent difficulty of taxing digital content, and the proposals for reform made in the European Union and the United States. In an attempt to explain the differences described earlier, the last part compares the historical development of sales taxes in the United States and the European Union.