Does this mean that the average self-employed worker is less honest than the average wage earner? Not necessarily. It’s just that he has much more incentive to cheat. He knows that the only chance the I.R.S. has of learning his true income and expenditures is to audit him. And all he has to do is look at the I.R.S.’s infinitesimal audit rate—last year, the agency conducted face-to-face audits on just 0.19 percent of all individual taxpayers—to feel pretty confident to go ahead and cheat.
Does this mean that the average self-employed worker is less honest than the average wage earner? Not necessarily. It’s just that he has much more incentive to cheat. He knows that the only chance the I.R.S. has of learning his true income and expenditures is to audit him. And all he has to do is look at the I.R.S.’s infinitesimal audit rate—last year, the agency conducted face-to-face audits on just .19 percent of all individual taxpayers—to feel pretty confident to cheat.
