Actually, there is method to their madness in this regard. They do this so they have another avenue to go after criminal enterprises. If the government cannot make the case against drug dealers, prostitution operations, etc., then they can ruin them financially by taxing (plus penalties & interest) their undeclared profits. Of course, this power can be abused by government officials in some cases, too ... thereby transforming the government into just as much a criminal enterprise as it is purporting to fight against.
The essential American soul is hard, isolate, stoic, and a killer. It has never yet melted. ~ D.H. Lawrence
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