The point that many people, both within and without government, miss is highlighted by this story.
If taxes get too high, people start finding ways to get around paying them.
Hence, there is a physical limit as to how much a government can successfully collect in taxes from it’s population as a percent of GDP.
The myth that is pushed on everyone else by those who favor tax increases at this point in the U.S. is that they will produce significantly more revenue that the Treasury is already collecting. The myth merely sounds good to people who don’t want to admit the myth is a myth or who don’t understand, or who are just too mentally lazy too think it through.
The underlying problem in the U.S. is simply the control that government (Federal, State and municipal) has usurped from the people which continue to increase personal costs and close off personal opportunity to profit from personal effort. Every year, there are more EEOC, more EPA, more HUD, more of everything in government compliance requirements - just to open the doors of a business and keep the lights on. Big business simply passes those costs through to consumers, while small business gets choked off by them.
Workers will accept cash and not charge the customer the VAT tax of 20%.
Two losses for the govt. - the workers income declaration and the VAT tax collection.
This is what happens when VAT/sales tax rates go too high...