Document Type
Book Chapter
Publication Date
2007
Published In
The Underground Economies: Tax Evasion And Information Distortion
Abstract
There are widespread reports of a growing underground, or unobserved, economy in the United States and in other countries. The unobserved economy seems to develop principally from efforts to evade taxes and government regulation. Although no single definition of such activity has been universally accepted, the term generally refers to activity – whether legal or illegal – generating income that either is underreported or not reported at all (see Chapter 1 in this volume). Some authors narrow the definition to cover income produced in legal activity that is not set down in the recorded national income statistics.
Recent discussion of underground economic activity was stimulated by publication of two estimates, one by Gutmann (1977) and the other by Feige (1979), of the size of the underground economy in the United States; these estimates were derived from aggregate monetary statistics. In the ensuing years, numerous other estimates have been made of the underground economy in the United States and in other countries. The magnitude of some of these estimates has prompted congressional hearings and various government studies. In 1979, the Internal Revenue Service (IRS, 1979) estimated that, for 1976, individuals failed to report between $75 billion and $100 billion in income from legal sources and another $25 billion to $35 billion from three types of illegal activity – drugs, gambling, and prostitution. In a more recent study, the IRS estimated that unreported income from legal sources rose from $93.9 billion in 1973 to $249.7 billion in 1981 whereas unreported income from these same three illegal activities rose from $9.3 billion to $34 billion (IRS, 1983).
Edition
2nd
Published By
Cambridge University Press
Editor(s)
E. L. Feige
Recommended Citation
R. D. Porter and Amanda Bayer.
(2007). 2nd.
"Monetary Perspective On Underground Economic Activity In The United States".
The Underground Economies: Tax Evasion And Information Distortion.
129-158.
https://works.swarthmore.edu/fac-economics/368
Comments
This material has been published in The Underground Economies: Tax Evasion and Information Distortion, edited by Edgar L. Feige. This version is free to view and download for private research and study only. Not for re-distribution or re-use. © Cambridge University Press 1989.