A greater number of Americans are doing jobs that don't require them to claim income tax according to UW economist Edgar Feige. The "tax gap" in the underground economy amounts to more than $500 billion in tax liability from an estimated $2 trillion to $2.25 trillion annually.
Feige says there's been an increase in this activity over the past five years. He says historically it happens during recessions as people gravitate toward work that can be done under-the-table. His paper, yet to be published, claims the ratio of unreported income to reported adjusted gross income today is approaching the peak levels of the World War II period
Professor Feige says although society is moving toward more credit and debit transactions there is still a vibrant circulation of cash as other activity leaves a paper trail.
This surging underground economy comes at a time when most state governments, including Wisconsin, are strapped with deficits.