Black Markets

Taxes, Regulations Drive Americans to Underground Economy

They choke off opportunity


According to tax advocates, there are groups and individuals who don't want to pay taxes because they think it's unconstitutional. Those against taxes claim that the Constitution's 16th amendment regarding the federal income tax has not been ratified by the required number of American states. Allegedly, several states' ratifications were not legal due to errors and violations of the ratification process.

Others are forced to work in the underground economy to make ends meet. People receiving welfare assistance, including food stamps through America's welfare system, could lose benefits if they work in the official economy. Because the welfare system often provides less than the essentials needed for economic survival, poor people often are compelled to supplement their welfare benefits by working in the underground economy.

The nature of the whole phenomenon provides employment opportunities for people from all walks of life who can't find a full-time job in the official economy.

And there are other benefits for the economy as a whole: According to a study by economists from Trakya University in Turkey, the underground economy provides benefits such as increased competition, employment, resources, and dynamism for the legitimate economy.