I say bring it on! I would love for my competitors who pay cash wages to be audited. It only makes sense to pay cash wages if you have unreported sales. With unreported sales a business ends up cheating on (all percentages are of gross sales):
Pockets the sales tax (8.4% here)
Employers share of Fica (2.2%)
Work Comp (1.2%)
Unemployment (.7%)
Employees taxes (4%) allows lower hourly wage to be paid since it is cash
Owner’s income taxes (18%) assumes owner uses about 30% of undeclared sales to pay cash wages)
Could you offer lower prices if you were pocketing an extra 30-35% of every dollar you do not declare? The incentive to cheat is huge. The cost to the rest of us is huge.
