The Real Underground


The Alternet Web site prints a story from the Tucson Weekly, a somewhat heartening exposition on the continuing size and prominence of the "underground" economy—the wealth-creating human actions that slip under the radar of statisticians and tax collectors. An excerpt:
While economists have long estimated that the U.S. underground economy equals about 10 percent of the gross domestic product (GDP), there are reasons to believe the number may be larger. According to a recent International Monetary Fund survey of 21 countries, the shadow economy has been growing for 30 years – the fastest in the 1990s – doubling from less than 10 percent of the GDP in 1970 to 20 percent or more by 2000.

"In the United States, for example, the shadow economy doubled from 4 percent of GDP in 1970 to 9 percent in 2000," according to IMF.

But the Internal Revenue Service is taking a dim view. The IRS recently estimated that the federal government is losing $195 billion per year in revenue due to underground activity – both legal and illegal. In addition, it estimates the underground economy is anywhere from 3 to 40 percent of the above ground economy.