The Value-Added Tax (VAT) is constitutional and fully legal under Article I, Section 8 of the U.S. Constitution, which gives Congress the power to “lay and collect taxes, duties, imposts, and excises" in order to provide for the general Welfare of the United States.
A VAT is considered an “excise tax” (a tax on goods and services), just like the federal gasoline tax or tobacco tax we already have.
The confusion comes from people thinking it would replace state taxes or violate state rights, but the H.E.A.L. Act is built to prevent that.
Under the plan, the federal VAT replaces current state sales taxes, but states automatically receive their fair share of that revenue through a constitutionally protected formula:
50% based on population,
30% based on consumption, and
20% based on prior sales-tax revenue,
so no state loses money and no state power is removed.
That means Illinois, for example, still gets its fair share of every dollar collected, without having to run a separate, redundant tax system.
Every other advanced democracy that uses a national VAT (including Canada, Germany, France, and Japan) distributes portions of VAT revenue to provinces or municipalities based on similar formulas, usually population and consumption share.
Congress would pass the VAT just like any other excise tax law. States would not need to amend their constitutions or surrender authority, they’d simply receive their revenue directly (just as they already do from federal highway funds or education grants).
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