@MostlyHarmless I don't think they “know exactly.” They certainly have some rough estimate of minimum earnings. But there may be some sources of income that are still out of their reach. That's why they try to intimidate you into reporting as much as possible. They also probably don't know your tax-deductible expenses. Note: I am not defending the income tax, which is an unnecessary bureaucracy. I'm just stating that your story is oversimplified.