I. Bone> Defintions:
A. Source I: U.S.A. Applications
“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.
What Does It Cost You?
A February 2005 report, California’s Tax Gap, prepared by California’s Legislative Analyst’s Office, estimates California’s income tax gap to be $6.5 billion. Reports on the underground economy indicate it imposes significant burdens on: (1) the State of California, (2) businesses that comply with the law, and (3) workers who lose benefits and other protections provided by state law when the businesses they work for operate in the underground economy.
Business:
When businesses operate in the underground economy, they illegally reduce the amount of money expensed for insurance, payroll taxes, licenses, employee benefits, safety equipment, and safety conditions. These types of employers then gain an unfair competitive advantage over businesses that comply with the various business laws. This causes unfair competition in the marketplace and forces law-abiding businesses to pay higher taxes and expenses.
Workers:
Employees of the businesses that do not comply are also affected. Their working conditions may not meet the legal requirements, which can put them in danger. Their wage earnings may also be less than those required by law, and benefits they are entitled to can be denied or delayed because their wages are not properly reported.
Consumers:
Consumers can also be affected when contracting with unlicensed businesses. Licensing provisions are designed to ensure minimum levels of skill and knowledge to protect the consumer.
The ultimate impact is erosion of the economic stability and working conditions in this State. Our pamphlet Paying Cash Wages “Under the Table”…Is It Really Worth the Risk? outlines some of the costs and effects of cash pay on your business, your employees, and taxpayers in general. It is available in both English (DE 573CA) and Spanish (DE 573CA/S/).
Source:Underground Economy Operations
Jump to Definition of “Underground Economy“: “Underground economy” is a term that refers to those individuals and businesses that deal …
http://www.edd.ca.gov/payroll…/Underground_Economy_Operations.htm – Cached
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Goods and services that are controlled or forbidden by governments but continue to be bought and sold privately are said to be traded on the black market. Illegal drugs, pornography and some forms of gambling are classic examples of goods and services that trade on the black market. Black markets tend to thrive in highly controlled economies where governments ration many products such as food, gas and luxury goods. Goods in the black market do not trade in open view of the authorities. When products are banned, they can be smuggled or produced illegally, yielding profits based on demand. Legal goods and services are sometimes traded on the black market to avoid taxes. |
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C. Source II: Assorted Internet definitions
- The underground economy or black market is a market where all commerce is conducted without regard to taxation, law or regulations of trade. …
en.wikipedia.org/wiki/Underground_economy - An expression used to describe all market exchange that goes unreported either because it is illegal or because those involved want to evade taxes.
www.crfonline.org/orc/glossary/u.html - Part of an economy that is unrecorded by the tax authorities. It may be unrecorded because it involves a barter transaction, for example, or because it is attempting to evade tax. URL: Universal Resource Locator is a means of identifying an exact location on the Internet. …
www.offshorehost.ws/glossary_of_offshore_terms.htm
II.Flesh on the the Bone: Conditions and Observations from the top
economic lives. Many are laboring in the underground economy. Never in history did so many aliens enter the United States illegally as in recent years. …
http://mises.org/etexts/underground.pdf
The real recession – a decline in the underground economy and reverse migration
The US official economic and unemployment figures are bad enough, but what is not factored into those numbers is the massive declines in the underground or “black” economy. These are the numbers that the government does not and cannot disclose, but the declines there are equally as bad. While estimating the size of the underground economy is difficult, a 2005 Wall Street Journal article estimates its size at around $970 billion which equates to about 9% of the real economy. The data on the real economy is enough to give pause – a 16 year high in the number of people registering as unemployed, a 26 year high in the number of people drawing unemployment benefit and a stock market down to the lowest indicator since 1997. In the underground economy the indicators are that the same thing is happening, and this is a decline in cash transactions possibly a more real measure of the health of an economy.
The US has long been a migrants dream whether they have entered the country legally or illegally. Not today. Reverse migration (people leaving the US to go home) is on the rise. The dream may be over in a depressed economy. A new report by the National Statistics and Geography Institute. deals with the numbers as they apply to reverse migration to Mexico, a long time source of legal and illegal migration. The report tells us that Mexican emigration has fallen by 42 per cent during the last two years. The study appears to confirm that emigration to the US has become less appealing amid an economic downturn and a increasing raids against illegal migrants. The survey, which was carried out via household surveys, includes all Mexicans who left the country, and did not break down legal and illegal migration. There have been other indications that Mexican emigration, which is still mainly to the US, has been falling dramatically. The US Border Patrol has reported a 39 per cent drop in the capture of migrants trying to cross the frontier illegally since 2005. Money sent home by Mexican emigrants has also fallen. Remittances fell 12 per cent to $1.9bn in August, the biggest drop since record-keeping began 12 years ago, according to the Mexican central bank. Mexican authorities say the country may also see a surge of returning migrants as the economy worsens in the US. Mexico City’s municipal government has predicted that up to 30,000 more immigrants than usual will return from the US over the next few months.
The migrant workforce, whether appreciated or not, has been a powerhouse for the US economy. Now it appears they are deserting as opportunity fades in a US economy in recession. In effect, this may well drive up labor costs for many of the businesses that rely on illegal migrants such as agriculture, processing plants and the like. This will be passed on as a price increase for US consumers. Both economies, real and underground, can be said to be now in recession. There will be greater poverty in the US and Mexico as a result. The social impact in Mexico may be major as families reliant on funds being sent home are denied such access. The flag may well fly at half-mast in Mexico as a result. Whether at time of boom or bust, the US and Mexico are intrinsically linked. They are feeling the pain too at this time.
The Underground Librarian 