The Underground Economy

In the economy of the United States of America, businesses are taxed on how much money they make. However, businesses that are in the underground economy remain under the radar and are not taxed on the money they make, nor do the employees of those businesses have to be taxed on the money they make as well.

Last year, it was estimated that the underground economy made about two trillion dollars in revenue. This “hidden” economic system can be very beneficial the normal economy. The people who make money in the underground or “shadow” economy are the people who usually spend their money. This gets the cash flowing in the economy which is great for business. Another benefit of having a secret economy is its a way of employing people. Giving people jobs in an economy is very important. Government regulations are making it very hard for businesses to hire people. This is a way of hiring workers.

With the benefits of the underground economy, there are also the disadvantages that go along with it. Last year, the government lost over 500 billion dollars worth of tax money, which is used in Social Security. Also, the workers in this economy do not reap the benefits of being in the normal economy like having health care, or Social Security after retirement.

Overall, having a growing hidden economy shows that there is much change in the United States that is needed and that more and more people are being forced into this kind of labor.