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This type of hidden income made by these activities go unreported in the national income, and has become accepted as the status-quo all over the world. The Underground economy is difficult to control, but can be managed with well thought out tax plans, and more severe punishment.
In the years leading up to 1965, the marginal tax rate was 17 percent. In just 15 years, the rate rose to 24 percent in 1980. Consistent tax hikes create a resentment for the system. To avoid these tax increases, many Americans chose to slide into the underground economy, where the tax rate is non-existent. There are many ways to become a part of the underground economy: the most common of all is underreporting taxes...
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