> Let’s say I rent a spare bedroom my home to someone; who’s going to report that income if not me?

How many people are in this situation? Or have other forms of income that are not part of their full-time job payroll? I know I don't, and most of my personal circle.

Even if 'only' 50% of the population is covered by the situation of having solely one income via payroll, that's still half the country not having to faff about with tax forms or tax software.

Like half my neighbors have some part time work that results in income they need to report themselves (mostly taking care of pets or horses or cleaning houses) and the other half let RVs stay on their property for rent. I live in a rural area but it seems really strange to me that you would expect all income to come with a W2. Basically everyone I know has at least some "peer to peer" income that involves no middleman or business.

Now on the other hand I have no idea how many of those people are properly reporting their income. Some definitely do but I suspect many don't.

As long as we are trading anecdotes, well I’d say it is extremely common among my circle. Young tech employees bought oversized houses expecting them to appreciate, and rent out extra bedrooms to help pay their mortgage.