Measuring the size of the underground economy is, of course, more art than science, since most of its denizens seek to remain anonymous. But convincing anecdotal evidence and a number of credible academic studies suggest that it is expanding briskly -- probably by an average of 5.6% a year since the early 1990s, edging out the real economy. [Underground …show more content…
"The productivity miracle may be slightly overstated because they are counting the output of millions of illegal immigrants but not counting the input," he says. Likewise, long-term budget projections could be overstating the potential growth of the legitimate U.S. economy or underestimating the need for high illegal immigrant flows to hit the forecast growth targets.
Ideas like that could well become food for thought for House Ways and Means Committee Chairman Bill Thomas of California. He wants to push ahead with tax reform this year, including the creation of a national sales tax and reduction of income taxes. In theory, a sales tax would capture the underground economy, since all wage earners have to spend money to live. [Robert Justich] On the Beat: Robert Justich of Bear Stearns Asset Management scours the streets of New Jersey for clues about immigration