Explaining what the shadow economy refers to - by Anthony Megna - Helium

Explaining what the shadow economy refers to - by Anthony Megna - Helium

A shadow economy is an economy hidden from the federal government. Most people report their income to the IRS every year, and a substantial amount of money is collected. But I say "most" people, and very, very few criminals. They prefer to operate in the dark, and some have become quite wealthy as a result! But a high percentage do get caught, and the government never gets a chance to participate in some of this illegal money.

Examples of activities involved in the shadow economy are drug dealing, arms and weapons dealing, gambling (Internet and other forms) smuggling, other criminal enterprises, etc. Usually, these activities go unreported, at least as far as the IRS is concerned, but it's surprising how much money it involves!

Some of the latest reports have stipulated that the United States has an underground or shadow economy approaching twenty percent of the above board economy. Of course, it's hard to get the exact figures as criminals and others who participate in this economy aren't in the habit of exposing their activities! But safe to say, the shadow economy is in the billions of dollars each and every year! So how can the feds get their mitts on some of this money to help run the government?

Although this article is not about taxes, the subject must come up if the intent is to grab some of these illegal dollars. Since most people engaged in the shadow economy are making their money "in the dark", then the subject of a national sales tax must be presented. In order for the government to participate in their share of this "dirty" money, which of course our government wouldn't turn away, then if a national sales tax on goods and services were imposed, ALL monies would be reported. At least all of the money that is used to purchase the basic necessities of life!

A very, very small tax on everything that we purchase, while phasing out the personal income tax, could work! There is not enough space in this article to get into all the math and permutations about how much money could be raised, but realize that over 300 million people live in this country! Even something as small as 1 percent could raise a substantial amount of money! Each and every day people purchase food and other basics to live,even the criminals! The personal income tax could be slowly phased out, while the national sales tax is phased in. This way some of that "shadow economy" money could be put to good use! That is, if you believe the government knows how to spend our money wisely!