So which of these incentives work and which do not? To find out, the I.R.S. conducted the National Research Program, a three-year study during which 46,000 randomly selected 2001 tax returns were intensively reviewed. (The I.R.S. doesn't specify what these 46,000 people were subjected to, but it may well have been the kind of inquisition that has earned the agency its horrid reputation.) Using this sample, the study found a tax gap -- the difference between taxes owed and taxes actually paid -- of $345 billion, or nearly one-fifth of all taxes collected by the I.R.S. This sum happens to be just a few billion dollars less than the projected federal budget deficit for 2007; it also amounts to more than $1,000 worth of cheating by every man, woman and child in the U.S.

But most people aren't cheating. And when you take a look at who does cheat and who doesn't, it becomes pretty clear just why people pay their taxes at all. The key statistic in the I.R.S.'s study is called the Net Misreporting Percentage. It measures the amount that was misreported on every major line item on those 46,000 returns. In the "wages, salaries, tips" category, for instance, Americans are underreporting only 1 percent of their actual income. Meanwhile, in the "nonfarm proprietor income" category -- think of self-employed workers like a restaurateur or the boss of a small construction crew -- 57 percent of the income goes unreported. That's $68 billion in unpaid taxes right there.

Why such a huge difference between the wage earner and a restaurateur? Simple: The only person reporting the restaurateur's income to the I.R.S. is the restaurateur himself; for the wage earner, his employer is generating a W2 to let the I.R.S. know exactly how much he has been paid. And the wage earner's taxes are automatically withheld from his every check, while the restaurateur has all year to decide if, and how much, he will pay.

Does this mean that the average self-employed worker is less honest than the average wage earner? Not necessarily. It's just that he has much more incentive to cheat. He knows that the only chance the I.R.S. has of learning his true income and expenditures is to audit him. And all he has to do is look at the I.R.S.'s infinitesimal audit rate -- last year, the agency conducted face-to-face audits on just 0.19 percent of all individual taxpayers -- to feel pretty confident to go ahead and cheat.

So why do people really pay their taxes: because it is the right thing to do, or because they fear getting caught if they don't? It sure seems to be the latter. A combination of good technology (employer reporting and withholding) and poor logic (most people who don't cheat radically overestimate their chances of being audited) makes the system work. And while it sounds bad to hear that Americans underpay their taxes by nearly one-fifth, the tax economist Joel Slemrod estimates that the U.S. is easily within the upper tier of worldwide compliance rates.