You don't think felony tax evasion should be frowned upon? That goes far beyond tax avoidance.
Why is it OK for the big guy but not the little guy just because they have good legal/financial resources? For some small businesses in this country, it's the only way to stay competitive to big enterprise. See: Little pizza shop versus large franchise.
I'm talking about the spirit of the whole thing, not the law.
To be completely honest, most business will tell you this revolves around the criminal amount the card processors take from them in processing fees.
Federal Marginal tax rates are 10% - 38%, plus maybe 5% in MN.
If they are giving you a 5% - 10% discount for cash, sure, it's probably because they appreciate skipping the credit card. If they give you a larger discount for paying in cash, they probably aren't reporting the income.
The problem with your position is that it reduces us to "nobody should have to pay taxes, ever". That's most definitely not going to work.
I guess there is no way to estimate the total $ missing from small business to compare.
Well, that's the problem. You asked a question about why one is acceptable and another is not and the reason is legality.
What it sounds like is that you want tax reform or to do away with loopholes, which is fine. There's a lot of shady/questionable/unethical things that the law allows and corporations take advantage of them whenever they can. And let's be serious - you would, too, if you had the resources become a multinational conglomerate and have the best accountants and tax attorneys that money could buy. We all would, especially if we were CEO/CFO of one of these firms with a responsibility to look out for shareholders. If you can deliver more money to them and you don't, you're probably going to be out on your ass real fast. The solution is to change the law because you are never going to convince people to not use it to their advantage. If I had a company and people told me I could make an extra 200k a year just by restructuring the company and making a few adjustments that would be frowned upon by society but would not land me in jail, the odds of me not doing it are slim to none.
Of course everyone who learns the can "legally" circumvent the law, will. That's clear with every large company in the US.