Quote:
Originally Posted by George Rice
I suspect the percentage of people of fudge their taxes on income that's hard to trace is much higher than you realize. The hassle of multiple books is hardly a deterrent. Getting caught and paying the fines and jail time is the deterrent. And most think they won't get caught if they keep it at reasonable levels.
The key part here is "hard to trace" and "reasonable levels."
Money laundering is super easy for small amounts. If you get $1,000 from W-2 income, it's pretty easy to pay for $100 worth of stuff in untraceable cash and live the $1,100 lifestyle while reporting $1,000.
Extrapolating this to larger scales is difficult. It's difficult to spend $10,000 cash, even when you're reporting a $100,000 income. Sooner or later you start to generate paper trails and such.
So it's exactly that people need to keep their tax cheating to "reasonable levels" that drives my analysis. Unless you're really determined to break the law and have set up infrastructure to do so, your reported income is going to be pretty close to your real income.