The Black Economy

The Black Economy

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The Black Economy is a hidden part of the economy, where private cash transactions go unreported, and therefore untaxed. Therefore The Black Economy is a set of people, that get an income that is not recorded, so they do not have to pay tax. Simplified: a person that gets undeclared earnings from a second job. This is also called Moonlighting. The Black Economy is not just called The Black Economy, it is also called the:- · Grey economy, · Unofficial economy · Informal economy, but The Black Economy was the adopted name. The Black Economy consists of two parts. The black economy is made up of two sorts of activities:

Legal activities that are not reported to the tax authorities and the income from which goes untaxed and unreported. For instance it is not illegal to drive somebody, or feed them. Although it is illegal to hide the income that you may get, and not pay tax on it. The Black Economy is good and bad it is good, because it does what the official economy does, and usually more effectively. The bad part is, the illegal activities that take place in The Black Economy.

In some countries such as Macedonia, The Black Economy is so strong, that it stopped Macedonia going bankrupt. If Macedonia had to rely on its own official economy, it would have gone bankrupt long ago. Almost as soon as tax was introduced, people tried to evade it and over time this was called The Black Market. Because people try getting around paying Tax, it means that they are using services like police, without paying for them.

Marijuana, pornography and illegal labour have created a Black economy in the United States which now accounts for as much as 15% of the American economy, according to a study. Russia has a black economy, consisting of 60% of their economy. Some countries like China, are trying to cut down on The Black Economy, by shutting down places that are selling counterfeit items. They are also shutting down places, which are selling fake alcoholic drinks. If you pay your cleaner or builder in cash, or for some reason neglect to tell the taxman that you were paid for a service rendered, you participate in the black or underground economy.

The following is a table of the percentage of black economy in a particular country:- Country Percentage of black economy Russia 50-60% England 5-10% America 5-10% Italy 30-40% A site that shows that shows that The Black Economy sometimes does better than the official economy, is the following:- http://www.guardian.co.uk/usa/story/0,12271,947880,00.html. The Site says that, whilst the official economy was in trouble, The Black Economy was doing really well.