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Notes on the UNDERGROUND ECONOMY, YOU do participate, don't you? [Archive] - SOWPub Small Business Forums


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July 7, 2007, 12:34 PM
The rapidly expanding UNDERGROUND economy, you are part of it.
Definition of "Underground Economy"

"Underground economy" is a term that refers to those individuals and businesses that deal in cash and/or use other schemes to conceal their activities and their true tax liability from government licensing, regulatory, and taxing agencies. Underground economy is also referred to as tax evasion, tax fraud, cash pay, tax gap, payments under-the-table, and off-the-books. From: http://www.edd.ca.gov/taxrep/txueoind.htm (http://www.edd.ca.gov/taxrep/txueoind.htm)

YIKES. I just bought a little gas powered motor scooter, and I mean scooter, for 50 bux from a kid around the corner at a garage sale. The little "schemer" didn’t even collect tax. He and his kind should be punished severely.

Too bad our jails are so over crowded that some hard core criminals are getting out early (like Paris Hilton)…or else we could clamp down on these vicious thieves of our Above Ground economy.

NO one talks about this, so let me. There are, by my own definitions, TWO forms of the Underground Economy, hereafter the UE.

First the illegal divided into two kinds: Black Market and Illegal. If you’ve ever been to a war zone, or disaster area, the BLACK Market thrives.

Mostly from stolen goods and/or inferior products. It has been reported that one hijacked truck of cigarettes (and this happens more than you think) is worth about a million dollars on the street. The epidemic of DVD’s and CD’s being sold on street corners across America is staggering. You don’t own one of these do you?

OK, then there is the other dark side UE; 90% of which are drugs, prostitution and gambling. Used to be booze in there, but after the failure of PROHIBITION, and loss of TAX revenue, we (Americans) now control the booze…and we collect our taxes.

Funny thing, gambling is legal in some form in just about every state. Lotteries, horse racing, Off Track Betting, dog racing, casinos, slot machines, bingo and poker tournaments.

AS long as the state can collect TAXES.

A couple of years ago in neighboring Tallmadge, OH a guy was busted for "illegal" gambling…those little NFL and College football hotsheets and some money from one of those "gaming" establishments…and they found MILLIONS of dollars wrapped in foil in his freezer in his garage.

Prostitution is legal in Nevada and many countries of the world rely on the sex traffic to stay afloat. Weed is legal in Amsterdam, and if the politicians ever find a way to TAX it, it probably would become legal here too. Some (Woody Harelson springs to mind) believe that it is a shame to watch all those TAX dollars go up in smoke after a good bust.

But you don’t participate in this "bad" dark side part of the UE do you? You’ve never played a football or basketball pool at work, or one of those slips at the VFW, or played at an illegal poker game have you? Certainly not you.

However, I’d bet the farm you DO participate, perhaps unknowingly, unwittingly with the UE, much like that little fellow I bought the scooter from.

Garage sales, yard sales, ads on craigslist, eBay sales, classified ads in your newspaper, auctions, home made jewelry, washing windows, deck cleaning, car washing, yard mowing, house cleaning are just a FEW of the many activities of the UNDERGROUND ECONOMY as defined by the TAX collectors.

Just think about it…IF we were able to collect the TAXES on the UE, why we could wage war in Iraq, Iran and other places for YEARS to come. "Sigh " from George W.

Remember NannyGate? Zoe Baird was Clinton’s first nominee for attorney general, but, alas, seems Zoe was not taking taxes out of her 5.00 an hour pay to her nanny (an illegal alien)…Ms. Baird was making around $500,000.00 a year while this was happening. What a swell employer she was, eh?

NannyGate brought the UE to our attention. Have you ever hired a babysitter for an extended period of time and did NOT take taxes out (shhh, don’t say you did out loud, you never know who’s listening)???

OK. OK. MILLIONS of Americans are taking part in this shadow economy, and most would conclude they do NOTHING wrong (and you’d have my vote on that too, at least for the garage sales and all things chatteling).

Why does the UE exist? OR a better question might be, do we need more policing of our CASH transactions? Perhaps the 10,000 level needs to be reduced to 1000 dollars, that is, if you withdraw more than a grand from your back account, you need to explain why. Friends, that day may be sooner than you think.

I talk a little bit about the Underground Economy in my new work, Fly Low & Collect the Dough, although, for the record; I do NOT advocate that any American citizen involve themselves in: tax evasion, tax fraud, cash pay, tax gap, payments under-the-table, and off-the-books.

Hell no. That’s what your CPA and tax attorney are for. J

As for the UE, I'll paraphrase a board member re: RJ/Playboy fiasco;

"Let she who is without a garage sale bargain cast the first piece of Degenhart glass".


PS. As always, food for thought. Comments, criticism or confessions welcomed.

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