[Foundation-l] [ANNOUNCEMENT] Greenspan illustration project

Ray Saintonge saintonge at telus.net
Sat Nov 3 18:20:31 UTC 2007

Thomas Dalton wrote:
>> As a practical matter no country is likely to pursue audits for
>> such small amounts where the audit costs would be significantly larger
>> than any tax money that might be recovered.
> They would catch it if you were being audited for some other reason, though.
Maybe. But then the effect of that trivial payment would still need to 
be proportional to the initial reasons for the audit.  For the person 
who is intent on evading tax there is a matter of cost/benefit 
analysis.  Assume a $100 per year payment, a 50% tax rate, a 100% 
evasion penalty and a 10% audit probability.  Over 10 years the person 
will earn $1,000.  If he regularly reports this he will pay $500 in 
taxes.  If it is only caught in an audit it will cost $50 tax plus $50 
penalty or $100.


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