MA Officials To Study Underground Economy

Why would anybody want to escape intrusive regulations and high taxes?

Governor Deval Patrick's administration is launching a first-of-its-kind study to define the scope and financial cost of Massachusetts' underground economy, as investigators continue to find widespread violations of tax and labor laws, officials said Tuesday.

The study, to be conducted over the next year, will identify the extent of employment fraud by industry category, and attempt to tabulate the amount of money the state is losing each year in unpaid taxes.

The effort will focus on the practice of illegally misclassifying workers as independent contractors, which allows companies to keep employees off the official books while benefiting from their labor. Misclassification often leads to minimum wage violations, avoidance of unemployment and payroll taxes, and failure to provide health insurance, retirement benefits, and safe working conditions.