High tax rate without 100+% confidence rate is a recipe for a huge black market....
So yes, it is a 3 part chain of cause, effect, cause, effect, cause, effect that is eating you El E.
I offer Greece as the model for RW high taxes; where the evasion is at 70% with 50% taxes + govt fees, local taxes, sales taxes, etc. There is nothing left. SO stand up business folks just aren't paying any more.
USA today is another good example to scrutinize...30% rates prior to deductions, and then add state taxes, and tax every time you spend or save.
England in the 70's crushing GDP is another, but the underground flourished, then the GDP stagnated...infrastructure for the BM didn't keep going into the system...no infrastructure for the BM to continue to persist....and the labour movement stagnated...
Pulling pod is the worst case...cambodia...
No matter, the more mayhem, the more it crushes GDP.
Taxes do the same thing over time as proven by hundreds of govts....It seems to crush tax receipts rather than increase revenues.
And that one whole section of the economy has to go SOMEWHERE.
The people seem to keep on keepin on....I bet there is something there not in the numbers....
AKA;
How many dollars are generated at pawn shops from stolen items?
VS
CDO losses in 2008 to bad mortgages in the US?
These did happen at the same time!
Purely from an economic perspective:
USSR Tractors are the epitome of economic complacency.
SO to is the US congress with 3 yrs of unemployment benefits being authorize...say it backwards: paid not to work for 3 years.
North Koreans Sweeping streets with brooms are no better...paid not to get much done.
Each is a waste of economic output under varied types of rule.
Next we go to the lawless:
Russia, after the fall, created more billionaires in recent history than anything else.....
The same fall opened up the already very prevalent black market, and all the business came out of the woodwork.
Somalia is the opposite, no infrastructure, and lawless.
Therefore, nothing for the black market, or clean business men to use to do business.
They have to build it from scratch, like the wild wild west of the USA back in 1700.
So purely from a Austrian Economists point of view:
Money can't be made or destroyed. It moves.
When fiat or fake money is printed, it is used while it's convenient to do so.
However, a government can only tax so much before it negatively effects both economic growth, and society as a whole.
It must be as efficient as the society it serves or it is really a burden.
The GDP per capita, and income per person is where you really gauge wealth.
When you see high criminal pay, know that some of that is white collar...
Bottom line:
Just a bit of law and order gooses the economy to have both a bm and strong GDP, the actual best case for employment.
1. It motivates everyone to do "SOMETHING"
2. Law creates pockets of opportunity as the people want what they want = see US drug war, immigration, etc.
The higher the tax rate, the more prone to swings of discontent...and for economists, it's shown in dollar value.
When those dollars go underground, society is hurt by no spending.
When those dollars are above ground, everybody has a "BETTER" way to spend them, disenfranchising those who were motivated enough to earn them....
Check out the canadian dollar vs gold chart, and then the dollar vs gold chart...10 yr.
So it's a catch 22, on purpose...just like the real world...
And it all revolves around taxes, government efficiency, and the confidence.
The more tax, the more violent those swings of confidence...the less efficient, the less you really control.
AT LEAST YOUR COUNTRY CAN"T GO BANKRUPT HERE
So now that all that is out on the table, how do we get those ideas into these equations....
Paragraphs of real world, game, and economics, into 4 lines of code
confidset = (( worker enthusiasm + consumer confidence + gov efficiency)/3);
IF ( confidset < 1){ commwaste = (1/ confidset) * .5 * economicoutput ; } ELSE {
commercial waste = (( -1 / confidset ) * .75 * govt waste )+ ( economicoutput * 3 * taxrate * (1/ gov eff ) ) ; }
bm = govt waste + commercial waste;
Ideas welcome, and I'll plug em in so we can see them live....
let me have it...
and 
We are Done here.... 
) I would also suggest removing the assumption that, given that your black market includes "normal" business being run off the books, that all the black market income is going to the "criminals".
