In the “wages, salaries, tips” category, for instance, Americans are underreporting only 1 percent of their actual income. Meanwhile, in the “nonfarm proprietor income” category—think of self-employed workers like a restaurateur or the boss of a small construction crew—57 percent of the income goes unreported. That’s $68 billion in unpaid taxes right there. Why such a huge difference between the wage earner and a restaurateur? Simple: The only person reporting the restaurateur’s income to the I.R.S. is the restaurateur himself;
