I don't think that an individual proprietor earning only 100k would have a motivation to do that. One can pay rent, buy vehicles, and purchase most everything else with cash. Why give 40% to the government? Social responsibility is great, but not if it's going to get you interdicted as a drug dealer.

You can do that, but at some point you might be asked to explain how you manage to rent a nice apartment and own a car without earning any income. Outright tax fraud isn't really any more of a sensible risk to take if you're a career criminal than it is if you work a regular job. After all, they got Capone for tax evasion.

It's more likely that they'll be caught up in enforcement of controlled substance trafficking laws, and those are the more severe charges the authorities tend to pursue.

Is it? It's quite difficult to prove that someone is involved in trafficking controlled substances, if they're careful. It's not difficult to show that someone is committing tax fraud if they have a big house and a car and zero declared income.

Most people involved in such activity have incriminating communications that are very easily used in court such as text messages. The bar for proving that various messages are evidence of illegal activity is surprisingly low. One individual not only has to be very careful, but also enforce the same level in everyone who communicates with them while providing customer service (e.g. making customers happy, feel good l, not offending them and so forth).

The issue of tax fraud is only an issue if they investigate you - someone in the tax department would have to find a reason to take notice. In the case of a narcotics trafficker it's more likely that activity would be observed by drug investigators than for the tax department would determine there's someone paying a mortgage or rent that isn't a significant income tax payer. That's not really how tax investigations work.