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OK, I took another look at your table and it is a bit clearer to me now. As you present the scenario in that table, what is the difference between the VAT you support and the NRST? The only difference I see is the added comlexity in your VAT. The retail customer still pays the cost of the tax.

The added complexity is not as much as many think. We are talking about basic cash flow accounting that any business would do in it's normal course of business. In the end it's a simple as:

VAT invoiced - VAT credits = VAT remitted

It removes the most complex accounting elements of the current system; like depreciation and foreign-sourced income. Both of these are extremely complex and are not part of the normal accounting of a business, thus the compliance costs.

Another issue that isn't brought up much is that a VAT is more "neutral" than a NRST. A tax is neutral when it does not distort the allocation of resources. By taxing retail businesses and not other businesses a NRST, the government creates a bias (however large or small) toward non-retail businesses. This bias causes a misallocation of resources and creates a drag on the economy (again, however large or small).

But the main issue is enforcement. There is no doubt that a VAT is easier to enforce than a NRST. By distributing the collection point throughout the production chain you greatly reduce the opportunity and incentive to evade taxation. And if someone does evade, they have paid the VAT on their inputs so the amount of lost revenue to the government would be greatly reduce.

Some may ask "do we want a tax that is easy to enforce?" Of course we do. Evasion means a higher rate is required to generate the same revenue. A higher rate creates more of a distortion in honest people's decisions about how to best allocate their resources therefore creating more of a drag on the economy.

In the end, I am convinced that if we see anything resembling a NRST in this country, it will be an credit-invoice VAT. It's less of a risk than the NRST with virtually all of the benefits. And when it comes to making drastic changes to our system of taxation, I think our representatives will want to minimize the risk as much as possible. If they screw this up things could get real bad, real quick and a lot of people in DC would have to answer for their decisions.