ents who get cheap labor by hiring a housekeeper with a criminal record who cannot buy bonding insurance. Sometimes it's a skilled tradesman who can cut corners on a job free of the fear of being sued. Occasionally it is an equal balance, such as an underage worker who is paid a few dollars an hour to help a busy mom. Usually, however, underground dealings involve the many poor being exploited by a wealthier few.
There is a certain amount of "honors system" in our tax code. Because we report the income that we pay tax on rather than simply receiving a bill, the burden of proof is on the IRS to prove that we are spending more money than we can be legally making. The IRS has a difficult time proving that income that was spent without entering any bank accounts actually existed. And because most of our tax is based on income, not consumption, hidden income is tax free.
The consumption tax broadens the tax base by getting at the underground economy. Under the current system, Americans who play by the rules and pay their taxes are forced to pay between 10 percent to 15 percent more in taxes to make up for the dishonest American
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