No low-trust society ever legislated its way into becoming a high-trust society. I remember America before the "honest services mail fraud" statute was in place, and contra your assertion, 1987 America didn't resemble a third world corruptocracy anymore than it does today.

if employees are receiving a significant percentage of their income through cash bribes from customers, it’s unlikely they’d report it properly on their income tax.

s/bribes/payments/ ...this is a risk you run by allowing cash. Of course, the risks of not having cash as a method of payment are different, and in my thinking more substantial.

Do you also believe an employee stealing or embezzling funds from their employer should be a civil, not criminal matter?

Of course! While we're at it, I also believe that tax fraud is a criminal offense. Note that none of these need the contrivance of honest service fraud to have been well prosecuted in the past, nor should they need the federal prosecutor's favorite GOTOs of mail & wire fraud to secure a true bill from a grand jury.

Edit: to add, some of the colleges in the admissions scandal were public, not private colleges - USC and UCLA. So bribery of the officials in that case was bribery of an employee of the state, not just a private business. It should be obvious that legalizing bribery of state employees is a very dangerous path to go down.

So...any state employee? I mean, bribing elected officials and officers of the court is already illegal; I really don't lump college admissions officers (or college garbagemen, lifeguards, sysadmins, psychiatrists) into the group of people the corruption of whose duty is so serious as to merit prosecution in federal courts, simply by dint of where they get their paycheck from.