This is an older article and one critical assumption is out of date—the number of illegal immigrants in the country is now dropping rapidly—but it still points up the fragility of the American status quo: untaxed economic activity is nearly 10% of GDP, and will increase as citizens become less commiteed to the "honor system" of tax compliance.
"We have had an 85% taxpayer compliance rate," says Nina Olson, the IRS’s taxpayer advocate. "I expect the number to decline," because the portion of employees subject to withholding is on the wane. Such employees are 99% compliant with tax laws, she says, but in the 21st-century economy, "More and more people are being treated as independent contractors. We are losing people from the withholding environment."