You and your friend Amy, while discussing your tax class, were surprised to learn that a substantial amount of income goes unreported each year by taxpayers. When taxpayers do not report all their income, the missing income must be replaced by imposing higher taxes on current taxpayers.

• Consider a time when you were trying to decide whether something should be put on your income tax return or not.
• Explain the differences between tax avoidance and tax evasion, and discuss the rewards of tax avoidance and the penalties of tax evasion.