David and Goliath: Underdogs, Misfits, and the Art of Battling Giants

(Darren Dugan) #1

behaved rationally—according to Leites
and Wolf’s definition of the word—tax
evasion in America should be rampant.
As the tax economist James Alm puts it:


In countries with effective audit
rates of one percent, you should
observe cheating levels of 90 percent
or above. If you declare one more
dollar of income, you would pay 30,
40 cents in tax. If you don’t declare
that dollar, then you keep all of it and
there is some chance you will get
caught. But it’s .01 or less. And if you
are detected then the IRS has to
determine whether it is intentional. If
it is not, you pay back taxes plus
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