Consumption tax is a tax on goods or services – what you spend rather than what you earn. In the U.S., consumption tax comes in the form of retail sales tax and excise tax
A national consumption tax would create a federal tax on consumer goods, perhaps emphasized over income tax, which funds Social Security, Medicare and other government programs.
The U.S. does not currently have a national consumption tax. Other countries do, including Japan, which has a 7.8% standard and 6.24% reduced tax rate for items like food, drink and some newspapers.
Over 170 countries, including all of Europe, impose a Value-Added Tax, which taxes goods and services at each stage of production.
Consumption taxes in the U.S. are on a state-by-state basis. Almost every state imposes sales tax except for Alaska, Delaware, Montana, New Hampshire, and Oregon, which instead allows cities to charge a local sales tax.