This is why sales tax + luxury purchase tax works better than income taxes...in any state or country. You can hide income in many different places but you can't hide it from the cash register. If you are rich you want to live rich and thus have to pay the taxes for doing so. If you are poor you pay very little tax since you don't have much to spend....but EVERYONE pays.
There is a big and valuable global lesson here. We have to find other ways to raise revenues besides - raising taxes on depleted tax bases, and then trying to spend money we can't account for. JMO
The best way to raise tax revenue without raising the tax % is to allow businesses to expand and raise wages. The problem with the EU and to a lesser extent (but growing) in the US is the ever growing social entitlement programs. You can't keep taxing the workers to pay for those who are content with living solely on government programs. The problem is that those that live solely on government programs breed at a much faster rate than those that don't. People brought up in these homes tend to grow up thinking that sucking the government tit is the norm and continuing the lifestyle. This imbalance in population growth at the low income levels cannot be sustained before the workers can no longer pay enough taxes to cover the burden. This is where the EU is now and where the US will be very soon. The only solution is to make more workers and less moochers. This has to be done first by creating jobs, then creating programs to get those that don't want to work trained to fill those jobs and then cut off the entitlement programs for those that CAN work but refuse to do so. I have no problem with entitlements for those that CAN'T work such as the elderly and handicapped but screw those that can work but won't. So how do we create jobs in the US? Lower taxes on goods produced here and raise import taxes. Also lower the company portion of payroll taxes and impose a tax for all 800 calls routed to an overseas location. This simultaneously provides incentives for bringing jobs back to the US while penalizing shipping jobs overseas.
Selling long term assets to pay a bill now is the most foolish thing one can do. Does a carpenter sell his hammer to buy lunch? Does a plumber sell his wrench to buy a beer? Does the trader liquidate his account to buy a fancy new car?
I disagree. Not to mention, your examples are flawed when compared to your original assessment. In your examples the people are selling "tools of their trade" to buy consumable goods...only one of which is even remotely necessary and none of which are bills. Now for real examples. Assume a family man gets laid off and can't pay his REAL bills. Should he keep his big screen TV, expensive surround sound system, golf clubs and other expensive "toys" and lose his house, or sell them and use the money to provide necessities for his family? No he should not sell the items he NEEDS to perform his trade so he can hopefully get meaningful employment, but the rest of the luxury shit can go in time of dire need.
+ The best way would have been to avoid the situation in the first place. Now its just bad option A versus bad option B.