Of course I am also paying an added cost for
Contractor 1 because
someone has to make up the taxes that he ain't paying.

CY: I disagree. I know of no department that says "Well,
Contractor 1 should have collected $72 in taxes from that
consumer, so we'll have to increase the other guys taxes
that much". My view is that government expands faster than
the rate of tax increase. So, I do what I can to encourage
people to pay less taxes.

And Contractor 1
puts the job off for 3 to 5 while he serves time for tax
evasion or has
to up the cost of the job to pay for penalties and interest
to keep his
butt out of jail. I feel much better for the guy who is
paying the taxes.

CY: No problem. Find a different contractor.

Of course, this is a debate completely separate from
whether the
taxes themselves are a good thing.

CY: We could add the "good thing" discussion, if you wish.