Dr. Art Robinson’s wrote a book “Common Sense in 2012,” and a quick summary is that it presents his positions for his campaign to be elected to the House of Representatives from Oregon. He is running for Congress as a citizen volunteer committed to help stop Congress from exceeding the powers granted by the Constitution. I mention in the review that reading the book prompted me to send a donation to Dr. Robinson’s campaign despite the fact he is running for office in Oregon and I live in Colorado.

Reading the book made me wonder how many more businesses are going underground to avoid the interference of government. I want to make it clear that Dr. Robinson does not mention or suggest “going underground.”  An article with the title “The Rise of the Underground” in the Wall Street Journal by Patrick Barta looked to be a good place to start in researching the subject. Most of the article is about people in India peddling on street corners because they have been laid off or couldn’t find a job in the first place. There are several examples given, and most people make a few dollars a day selling food and other commodities. One creative woman was earning $10 a day selling shots of “medicinal wine,” wine mixed with herbs, to truck drivers and motorcyclists. The article called it “…an adult version of the neighborhood lemonade stand.” Of course such a stand would face numerous problems in the United States. There are many localities that require a license to operate a lemonade stand, and I doubt that could be expanded to selling alcohol.

The article also describes “informal workers” in the U.S. “…including off-the book maids, gardeners and ‘gypsy’ cab drivers…” It is estimated as much as 10 percent of the U.S. economy is off-the books (not including the large illicit drug trade,) and the percentage is undoubtedly growing as people are laid off and are forced into doing all manner of part-time contract work.

An article titled “The Mysterious Case of the Disappearing Prosperity” by Baron Bodissey provides some interesting analysis about why the underground economy exists. It is no surprise that taxes play a role. An example is given of someone repairing a computer, and the job is worth $200. You can accept the job to do the repair and reduce your income by paying taxes, demand that the purchaser pay more so you can pay the taxes and still make the $200, or both of you can agree that the money will change hands without the government being told. Massachusetts has created a bureaucracy with the strange title, “Joint Task Force on the Underground Economy and Employee Misclassification” with a toll-free number to allow crooks who aren’t reporting income to be reported. Apparently that allows some people to earn money by being a paid government informer.

The federal government also wants to get its share of any “earned income.” There is a part of Obamacare that requires businesses to file forms not only for non-employees who are paid more than $600 but also for every business they paid more than $600. That’s good news for people with accounting experience, because businesses will need more employees to file all the required forms. That will give government more money to mismanage, but I can’t think of a benefit to the businesses.

Barter is also becoming more popular. Perhaps someone offers to mow your yard if you will prepare them a resume. No money changes hands, although I expect Massachusetts would expect both parties to pay taxes on the value of the services exchanged if they are reported by an informer. The IRS certainly believes taxes must be paid on barter. The link gives instructions on which forms are to be submitted to “…include in gross income in the year of receipt the fair market value of goods and services received in exchange for goods or services you provide.” The IRS is aware that “The internet has provided a medium for new growth in the bartering exchange industry.”

The article by Mr. Bodissey and Dr. Robinson’s both mention a comment by Ronald Reagan. “The government’s view of the economy could be summed up in a few short phrases. If it moves, tax it. If it keeps moving, regulate it. If it stops moving, subsidize it.”