Back in June I asked why tax rates are so high. No one gave me an adequate answer.
Part of the answer is found in today's New York Times. Rich people are cheating to the tune of $70 billion/year. This amounts to 7 cents of every tax dollar collected. Massive tax cheating causes higher rates for honest taxpayers.
It really annoys me that economics bloggers like Greg Mankiw are obsessed over the minimum wage when rich people are cheating on their taxes by an amount greater than the aggregate additional salary that all 15 million low wage workers would realize from a $2 increase in the minimum wage. Isn't tax cheating a much bigger problem than a small increase in the minimum wage? Why don't right-wing economics professors care about real problems?
Tax cheating is a huge drag on our economy because the higher tax rates necessary to make up for the cheating discourages honest investment.