Prices are set on the margins, the reason people are paid what they are is because even a relatively small change would cause someone to do something differently. Same theory as why we can be confident raising the price of something a few cents is likely to cause someone to change their decisions - if it wasn't, the seller would raise the price by a few cents.

It isn't obvious what a 10% across-the-market tax will do, but by the nature of prices they are always going to be set near tipping points so it probably is going to cause people to drop out of the workforce or reduce the amount of time they spend working. Maybe tip people into less productive jobs that pay cash. I dunno. How many people and how many hours is an open question but all your imagination is really telling you is that you don't deal with marginal participants in the workforce.