I'd contend that black markets for tax evasion are qualitatively different from black markets for restricted goods. Consider the hefty tax on cigarettes. Sure,

I'd contend that black markets for tax evasion are qualitatively different from black markets for restricted goods. Consider the hefty tax on cigarettes. Sure, there's a cigarette black market, but it's not nearly the majority of the market. The (highly-opinionated) Tax Foundation did a study on this [0]. I'm not sure how reliable their numbers are (again: they're a foundation with an agenda), but if you read through their own spin, you can see that the big tax-based black market for cigarettes exists where there's a state-border disparity in tax rates, and even then, in 48 states the (estimated) black market took up less than half of the actual market. So: set taxes at whatever arbitrary level, but don't go too high. Also, consider setting national tax rates instead. So many of our problems derive from state-level control of stuff. Delaware corporations, state taxes, state laws. But I'm just a poor socialist / federalist. [0]: http://taxfoundation.org/article/cigarette-taxes-and-cigarette-smuggling-state http://taxfoundation.org/article/cigarette-taxes-and-cigaret...