I'm sure the readers of this blog have dutifully completed their 1040s far ahead of the April 15 deadline for tax filing. And as honest, law abiding citizens, we've paid up each year as we are required by law to do.
Nonetheless, it's interesting to see what others are doing with their income. The burdens put upon us by the government have driven some income underground. And in fact, Rosslyn Smith at AmericanThinker.com credits Obama for that. See Stiffing the Tax Man: The part of the economy that has grown under Obama. She says there about 30 million households in the U.S. that are **unbanked or **underbanked.
Alternative Financial Services include currency exchanges and other non bank check cashing services, money order, pay day loans, rent-to-own plans, pawnshops, tax refund anticipation loans and other non traditional money lending.
While social justice warriors look at the unbanked and wring their hands about the negligence of financial institutions in under serving the poor, economists use the above numbers as one way to estimate the size of the "gray market" or the "shadow economy" For those who participate in the shadow economy using a bank means leaving a paper trail for the government to follow. If such people have to accept checks, it is likely that they make a habit of not cashing such checks into any bank account they may own.
Emphasis added by me. Smith continues:
Some of this shadow activity involves serious crimes such as drug dealing, stolen goods, hiring illegal immigrants, etc., but a lot of it is simply using only cash transactions in order to scam the tax man. Cash transactions are also used to stymie other government agencies that either dispense goodies based upon reported income or to avoid the onerous regulatory burdens placed on some activities. There is even a technical term for it: legal source unreported income.
By the way, unbanked means the person doesn't have an account at a bank or other financial institution. And underbanked means the person has poor access to mainstream financial services normally offered by retail banks.
Coming in a future post: Breaking up a large bank deposit into smaller ones can make you a felon.
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