Under-the-Table Pay Is Unacceptable

The federal government should crack down on businesses that pay employees under the table, because it needs the tax revenue. Pro or con?

Pro: Everyone Has to Contribute Taxes

The "underground economy" hurts government and private businesses. It directly affects government’s ability to fund public services such as education, public safety, and human services. It also undercuts legitimate private businesses. It is imperative—especially in hard economic times—for state governments to take action by holding tax cheats accountable.

Employers who pay an employee under the table or misclassify an employee as an independent contractor, do not pay their allotted taxes and avoid other payroll obligations. This results in billions of dollars of lost revenue to state governments that would be used to provide essential public services.

The underground economy also puts law-abiding businesses at a disadvantage in the marketplace. Tax cheats gain an unfair advantage by not paying their share of taxes and fees. This can result in legitimate businesses shutting down.

Consumers are also affected by an underground economy. In many cases, consumer services such as home repairs and improvements are performed without proper licensing, bonding, insurance, safety, or quality—leaving little or no enforceable remedy for disputes.

In Oregon, the Department of Revenue has determined that unreported income amounts to an $18.3 billion underground economy. That represents 11.5% of Oregon’s total gross domestic product. The $1.25 billion in lost revenue to the state results in higher taxes for law-abiding citizens.

It is time for state government to be accountable to taxpayers and law-abiding businesses by enforcing our tax and employment laws.

Con: Show Compassion for Low-Paid Workers

In our haste to prevent employers from making under-the-table payments, we forget about the unintended consequences of such a crackdown on low-wage workers and the self-employed. Worldwide, 1.8 billion people are part of the "informal workforce," according to the Organization for Economic Cooperation & Development.

U.S. workers who may be paid under the table include our nation’s 7.4 million food and beverage workers, whose median wage is $7.14 per hour including tips, and maintenance workers, whose median annual income in 2006 was $19,930. In the U.S., 10.7% of full-time service workers were classified as the working poor, according to the Bureau of Labor Statistics. The reality for all of these people, and those they work hard to support, is that every penny counts.

Opportunity@Work recently released the Family Bottom Line, a study charting how much it takes without government assistance for families to get by, relative to where they live. The study found that a family with two adults and one preschooler in Omaha needed $33,191 a year. And we know from experience that many families fall well below this line (even as some point to Nebraska’s high employment in the face of this recession).

While we would never advocate tax evasion, we know a growing array of families that don’t make enough despite their hard work. Punishing low-income and low-wage Americans trying to support their families, by asking them to carve out even a percentage of $20,000, could send them over the edge into homelessness, a cycle of poverty, or worse.

Opinions and conclusions expressed in the BusinessWeek Debate Room do not necessarily reflect the views of BusinessWeek, BusinessWeek.com, or The McGraw-Hill Companies.

Reader Comments

Terrell

Until I read this piece, I had never really considered the impact of cracking down on under-the-table payments. If I weren't making a living wage, I couldn't imagine I would be able to afford sacrificing even a single cent.

Sonal

Ms. Bailey Fowler makes a very good point. Obviously those of us who have access to financial institutions should pay our taxes--but you cannot simplify this issue. Hasty legislation would set back the many families who can barely scrape enough of their income together to put food on the dinner table. Rep. Holvey and Sen. Prozanski, I hope that you will consider leveling the playing field for the informal workforce with any proposed legislation.

TOMW

You're never going to get rid of all the employers paying their employees "under the table" anymore than you'll get rid of all the companies hiring illegal alien immigrants.

It's just a better deal for all concerned. The employer doesn't pay payroll taxes or unemployment insurance. He probably still has to carry some form of liability insurance, but it won't cover worker's compensation.

The employee doesn't have to pay income or Social Security taxes, unless he declares the income at the end of the year, which would defeat the purpose of the exercise to begin with. Unless the employer classifies the employee as an independent contractor (which, with certain restrictions is legal) and submits to him and the I.R.S. a 1099-Misc. for the compensation paid, nobody will ever know.

The downside for the employer is that he cannot deduct the wages paid to an employee unless he submits the 1099-Misc.
But the problem is systemic. If the taxes and other requirements were not so onerous in the first place, more would comply with the law.

In countries with what is termed economic freedom," nations with the most have the highest obedience to the law. Countries that rate poorly in freedom have the largest "underground" economies.
People are going to do what is necessary to make it economically. If that means violating the law to eat, that's what's going to happen.

Squeezebox

Some people are paid under the table because their employer simply can't afford all the taxes and now health insurance burdens. Some workers want under the table payments so they can still collect benefits. Some take under the table because that's the only work they can get.

Bert

"Under the table" translates as: Illegal. When employers shade the law, start having people in their employ that have no record whatsoever, for one thing that paves a path for people that are actively looking to break other laws, and eventually you get into bribery, turning a blind eye, "business-as-usual" acceptance of habitual blithe disregard for any kind of labor laws, and then eventually someone gets hurt or killed on the job, or the immigration authorities have to shut the place down, or there's some other kind of public risk or menace associated with the place, so maybe it's better to have businesses that operate within the law and state government that sees to it that no associated costs become so prohibitive as to motivate people to consider other means of doing business.

On the other hand, I think we're witnessing a California-like growth in size and scope and cost of government--we've seen fuel, housing, and food costs grow and grow and grow, unions vying for benefits and compensation that just isn't there, passing the "savings" along to their neighbors, and the stark fact of people trying to support themselves by some means in a state that is #3 nationally in unemployment. Some Oregon counties rank even higher than that, with one I believe in excess of 21%. Jobs mean money, and when people have been unemployed long enough, they start seeking other means of supporting themselves that don't even have anything to do with working at all, so legal, or not-so-legal, part-time, full-time, overtime, people need a means of self-support or they end up moving in with the relatives, in jail, in the hospital, in the dole queue, and even Obama probably isn't ready to cut Oregon a check for $18 billion dollars...besides, California is going to annex the place, and then we can all ride their welfare system. Woohoo.

steve Bangalore

Under the table pay has been going for decades--get real. Maybe you have truck and move people cheaply. Or you work part time for an individual for cash. Gee, that flea market business is all cash, or lawn work, house cleaning. The list is endless. As long as it is cash and you don't deposit in an account, the chance of getting caught is minimal. Go to any illigal alien labor zone, wave some cash, and you have workers. How many carpenters, plumbers, nurses work extra for cash? Gee, I bet even Businessweek writers have cash jobs, too.

Joseph Fetzer

I can't believe people would actually condone this illegal behavior. It is not fair to the people who pay their unfair share of the taxes because others are not paying. Also, these people can then double dip, i.e., "I don't make any money--look at my tax return" and then they get all the social services like food stamps and Medicaid because they are lying about their income. If people want to go out to dinner every night then they should pay a little more so people pay their taxes. I wonder how many are illegals anyway.

Aditya - New Delhi

From a foreign perspective, it's a horrible practice, but no matter what, one can always change the terms from cash to country club memberships, expensive dinners, gifts, (illegal perks as well), favors or discounts, etc. I don't think that it's possible to completely remove it unless taxation is reduced or that the the penalty becomes close to that of a life sentence or even death.

Asia is far worse and the implication is that the Chinese and Indian economies are actually about twice their actual size since a large chunk of the business is done in cash.

La Larry

Ok. I Listened to the yea- and nay-sayers.

Can only see one solution. Elimination of all currency, only electronic transactions.

Everything is run through the One World data base, and all is revealed. Big Brother knows all, tracks all, and controls our Lives. We can come up with some cool name like the World Patriot Act or something.

I cannot imagine the young man that mows my grass once a week accepting a Mastercard. I would love to see the look on the cartel dealer's face when I ask him if he accepts American Express for a truck load of marijuana.

How much freedom are you willing to lose? Cash is as much a freedom as to bear arms.

Let's quit picking on the family trying to feed and house their family. Let's go after the big fish.

Companies all over the globe are downsizing to balance their sheets, (jobs lost). Are the governmental bodies?

The parasites who exist off our tax dollars need to be looked at very closely. Downsize, you pay their wages. What do they do, what do? They get paid--what's their perks? How many individuals are you paying to support them? There are no laws because they create the laws. It's too big. We have created a monster.

A cleansing of Wall Street is not enough. We must move forward to Washington and remove the leeches that are sucking the life blood of the country I Love.

I'm 60 and it's good to be back to the 60s. This should be a tribute to our generation, our last stand. United we stand, divided we fall. We knew then as we know now, our government needs reform. We attempted, but backed off of our obligation.

We have a good leader, but he needs to hear our words and feel our support. If you were with me in the 60s, be with me here.

POPS

Seeer

The government so-called work force is the biggest rip off of all. High pay, high benefits, tons of overhead, crazy work rules, lots of days off. Government is the least efficient part of the economy and the more they are involved in a private industry the more inefficient it becomes. Health care is but one example, and look what they did in enforcing banking and financial laws. The U.S. is collapsing fast and picking up speed. For the government, there will never be enough money to waste. There are no morals anymore, so why pay the government?

random

"How much freedom are you willing to lose? Cash is as much a freedom as to bear arms."

Right. Because bearing arms will protect you if a government gets too uppity and decides to use its tanks, missiles, and bombers to subdue the population. That's when your 12 gauge will come in handy.

But in all seriousness, when it comes to under-the-table pay, we can't say that the law applies to some people but not others because they don't make enough money. Why don't we just make taxation easier on low income workers so instead of breaking the law, they can get tax relief and afford some of the basics they need?

Of course, we'd need to make up for lost revenue and get past the screaming fits that helping people on the bottom of the economic ladder is socialism and Communism and fascism and whatever -isms will be thrown out on Fox News during the debate.

Strategery

Getting paid under the table is wrong, but as usual, the government wants to stick it to the little guy--like the person doing odd jobs for cash on the weekends or bartering (yes, you're supposed to pay taxes on that), or selling a used car and not reporting "gains" on it. If we go after people that are paid under the table, it is only fair that we go after the big guns too--like corporations and individuals that built tax shelters and negotiate reduced tax bills with the national and/or state governments. In addition, we should raise the tax rates for investment income and remove special corporate tax breaks and welfare--including incentives to outsource.

Retired Laborer

The individuals and employers that are playing the under the table game are the first in line for welfare handouts, medical care for their families, medical care for on the job injuries, and all the other 'free' services like education of their children along with the police and fire protection they expect.

We need to stop all under the table payments. Add mandatory fines, jail time, and long term community service for all employers that continue the practice. This would start with the first offense.

Larry in VA

I thought this was illegal. What's the question?

Until the law is changed, it's illegal. If someone wants the law changed, take it to Congress.

Is the question whether to change the law?

Strategery

How is getting paid under the table any different from unregulated "investments" and "financial instruments"?

Both skirt the laws and the taxes that are due, both operate outside of established accounting principles and regulatory framework, both are unregulated and have little accountability--and both practices drive people and businesses to seek government handouts.

angela

Illigal is just that--illegal. Our goverment isn't enforcing the laws we already have in place.

cindy

While many under the table people make little money, let's say for example day laborer in CA gets 12-15 dollars per hour. They don't report the income and now they are eligible for rent subsidies, food subsidies, earned income credit from taxes. In the end they are making more then those who are paid $25 per hour and paying taxes. It is important that everyone's pay is documented--remember 50% of Americans pay no federal income tax at all. But many under the table contractors and landscapers are able to partially report income on their taxes, onces again making them eligible for programs and EIC and student grants for their children.
The tax system should not be a burden only to those who get paychecks.

ACrowley

Well, it's really not good to see out of several worker (dispatchers) 4 of 6 are getting paid under the table and get checks of retirement or disability while one of the dispatchers gets 1 day a week and he has no other income. It's not cool to see that happen--that's at least 4 jobs in one company that could go to 4 people that don't receive retirement or disability that's under the table disadvantage if the tax man was calling 3 of these guys would quit.

foolish nation

You want me to pay taxes? For what? For these fools running the country under the stewardship of BO, to spend like drunken sailors? I like Obama as a person and orator. I loved his autobiography. But the way he is preparing to run this country to ground with his health care agenda makes me sad. IF there is a problem with health care costs rocketing, don't you need to figure out why before you add more folks into the system? Utter dimwitness.

Paul Short

As long as the Obama administration and liberals in Congress continue promoting anti-business and socialist practices, underground business will blossom.

As in the former Soviet Union, black markets will develop and spread in order to bypass the oppressive US Kremlin.

MikeT

Paul and Floyd represent an Oregon legislature that is out to increase state revenue at any cost. Oregon has a minimum wage that is higher than the federal and that increases every year. But an employer is not allowed to include tip income when measuring the amount paid. Doing so would have assured tip income was counted in the taxable income stream. The legislature rejected that idea. Someone needs to refresh my memory on the definition of a hypocrite.

Norman T

Help! My college student son took employment for minimum wage plus used his own car to deliver pizza. Over the next couple of months, the owner convinced my son that under the table payment would work better. The owner assured him this would be best. Now five months later, the owner owes him over $1,000 dollars with promises daily to catch him up on his pay. With me just finding out about this, I don't know how to deal with this employer that owns three pizza places. He refuses to pay my son and keeps giving him the run around. Please advise me as to how to go after this jerk. Oh, I don't blame my son for accepting cash for payment because he really believed and trusted this middle-aged business owner. I want to go after this jerk--can someone please help me give this guy what he has coming so the next young person won't get hurt by this type of illegal business practice?

J Ess.

Flea Markets are not under the table pay. I've worked flea markets for 7 years. We had to acquire a tax ID license and we now pay taxes on every item we purchase and sell quarterly.

Jess H.

Under the table? Yes I think it all sounds great but in the end how can someone get employed under the table and then right from the start trust that this individual will pay them all that is owed? I was recently offered "full time" work for a business, on my second day I noticed that I still did not have to clock in and I had yet to fill out any W2's, so I went to my boss, and she said "Oh, this is under the table."...So if she could not even tell me that from the start, she is not having me clock in and she just expected me to work...how can I trust that I would get my money? Yes, times are difficult at the moment, probably the hardest I have ever delt with but the truth is, we don't know these people on a personal level so how can I trust them with "my" money? Maybe paying taxes in the end is better because atleast we are guaranteed the money we honestly made.

your mom

Suppose I work under the table?

Brada

I know a guy who lays his guys off in the winter months, and they legally collect unemployment but then they are brought back to work while collecting unemployment and are paid in cash under the table. There are weeks when they reach 40 hours under the table plus unemployment. He also pays them anything over 40 hours in cash, off the books. What is the most that can happen to either him or his employees?

moname

Jess H.,
Just so you know, if anyone is not getting payed in cash daily for "under the table" work, they need to demand that they do receive cash daily for their services or separate from that employer as fast as possible. Period. If you are not getting daily payments in actual, physical money (not checks) when working "under the table," you are begging to be exploited. Demand your money immediately.

unpaid-elf

Sometimes the reason behind taking an "under the table" job goes beyond the avoidance of paying taxes. Just being able to work at all is a privilege that most people take for granted. Sometimes the chance to earn money is enough to motivate someone that would be considered "unemployable," not just those who don't have a green card, but what about the people who have made mistakes in the past and despite their education and experience, (and charming personality) never have a chance when the background check lands the resume in the circular file.

So you take the job, at risk of being taken advantage of, then you are. Sitting for 2 1/2 weeks with no pay right before Christmas and your boss who claims to be "strapped" is taking a trip for the holiday. There is a tree, but what do you tell the kids when there are no gifts underneath? What is the recourse? If I make a commotion, I will just lose the job entirely. If I don't, I starve. How can I "demand" my money when the boss can just act like I'm nuts and she doesn't owe me anything?

BJ

I went to work with Liberty Tax last year as a waver. We were told we were being paid under the table. Would not be reported to anything and not get a 1099. Now she has decided this year since she can't claim it because I made $2500.00, she is going to 1099 me. She lied to me. What can I do about it legally?

GB

I got a good laugh at who is against "under the table" payments...POLITICANS...Oh, that's rich!

Dave

This whole problem of tax evasion wouldn't be a problem if taxes didn't exist. I mean, high taxes are only a greater incentive for people to cheat on them.

We get taxed when we get money, and we get taxed when we spend it. Personally, I won't mind a 10% income tax at all. But when it hits the 25% bracket, it's a little outrageous. I have to pay 25% of my pay (which isn't that much for that bracket), but yet I'm not eligible for things like tuition assistance for college. I get to pay taxes, but I see little of it in return in the form of government services.

No wonder people like being poor. They don't need to work, don't need to pay taxes, and on top of it all, they get financial assistance from the government.

No wonder our country is circling the drain, we're punishing those who contribute to our great nation and rewarding those who don't.

Big Al

If you really want under-the-table pay eliminated, then please pay my taxes of $15k annual. I make 27k annual, which is a good job until taxes hit.

Remember: Businesses don't pay business tax, customers do; apartment owners don't pay property tax, tenants do.

When we include all taxes, the actual rate is near 59% of your income. "Another day, another 41 cents."

Also, when corporate taxes increased in 2009, 3-dozen people lost their jobs at my workplace.

Government employment as public service is not there for the perks because it is PUBLIC SERVICE; it's paid for by us taxpayers.

Alpco

Anyone that buys anything over-the-table does contribute to tax revenue, in the form of: sales tax, property tax, and corporate tax, to name only a few.

anita

My ex-husband works under the table to avoid paying child support. His back payments could buy me a new home. He really makes in the $100,000.00 range, but only claims $13,000.00. It's an outrage!

joan maraj

I ask my employer to start paying my Social Security taxes and to also pay most of my salary on the books rather than under the table. And guest what, he replace me with another person after 5 years of service. I wanted to hire a lawyer but can't affort it. He himself is a lawyer. I want to know what I can do to him to get him pay the IRS. I also ask him for my 1099 form and have not received it as yet. Help me please. He has 100,000 milions dollars in cash and lives on the intrest only.

Adam

Non-consensual tax is theft. Find free market solutions to the problems "solved," i.e. paid for with stolen money with threat of violence if you refuse, by the government.

Are we not free men? Do we not have the right to work for a second party and earn a living without interference from a third party?

If we do not have this right, then we are, in fact, slaves.

Billy DeCastro

Under the table pay has been going for decades, a little corruption is OK. As long as no one gets hurt is OK. Oh stop, it happens every day, is not any of my business what or how anybody else gets paid.

These are the comments from all the non-intellectuals philosophers out there. Of course many of you just "went to school and never grasp the concept of it, that is to "get an education" so you will not accept what is illegal--the more of it you allow people to get away with the worse our economy will become and eventually the country will be so corrupt there is not way to resolve or social problems driving a country into third world levels where only the few privileged are allow to enjoy good medicine, food, clothing and many other necessities and luxuries that we all are entitled to take advantage of.

By the way for those who think we are free, well I have news. We have never been free, and especially when you lived in your parents' home, so you moved out, and you're still not free. You want to die your way when the time comes, and someone could interfere with that as well, if we are free; why is it a crime to walk on the street naked? If we are it should be anybody's business if I do, so forget it about it, accept he fact that taxes were enacted to run the country, but if it is not managed correctly, there is only one solution and that involves something called honesty, that we all have lost, all of us, because including me, I have trained my face to people doing something wrong instead of telling, because I do not want to be called a "rat" that makes me a part of something we are all guilty of.

andrew

My father has been paying his employees under the table for years. He is retired now, and I took over his estate and am doing the same thing. I have about 10 employees working for me and getting paid from the estate money. I pay them each over $60,000 yearly under the table and also on the books a little. I do not issue them a 1099 form at the end of the year. It is same to do it. If some report me to the IRS, will they investigate me and how long will it be for them to get in contact with me? What will happen to me if they pick me up. Will I have to pay back all those taxes that my father didn't pay or they will only start from the time I was responsible for paying them. Or will I never be investigated.

alex mon

I am working for my boss, who is also my lover. And get paid under the table as the rest of his workers. If someone reports me will I get in trouble with the IRS or my boss. If it is my co worker, they don't know my age, Social Security number, and my home address but they know my work address. Can the IRS take their complaint?

ukusa

The IRS will most certainly take their complaint. We take many of them every day. We follow through, too, and have so far prosecuted over a million employers, which is just a drop in the bucket. We are the IRS, the biggest theives in the world.

RANRAn

Read the Communist Manifesto and you will see as one of its tenets, a high progressive income tax. This country is turning or is already, Communist. Nuff said.

Burgher

Under the the table used to be called barter.

Alice

You have certainly given me plenty of evidence that lying, stealing, and ripping off the government are the American way. I'm so proud.

greg hope

My experience with labor contracting has led me to the pro opinion. A legal crack-down should not mean prohibition, but a potentially judicious regard for all equities involved. My simplest persuasion is, I cannot turn down a buck, no matter what color it is.

Caz

I just got laid off from a job of 8 years. A business that was sold twice in the last 3 years. After purchasing the business last Sept., the owner told us we would be closing for 2 weeks for a remodel and he wouldn't be starting an official payroll with deductions until we reopened. Started the remodel in Jan., paid us cash to paint, etc. for the month of January. Then we sat. Couldn't collect unemployment. No proof of income. Need to be on the books employed for 4 of the last 5 quarters. We finally reopened mid May. He still paid off the books, no deductions. Received finally a real paycheck, 2 actually. Today he fired me because his payroll is too large. No unemployment benefits for me. So tired of being ****ed for following the rules.
Any suggestions?

Dave

The government wastes billions of dollars on unnecessary things. If the difference is between having a roof over my head or living on the streets, I'm all for getting paid under the table. The few hundred dollars a month that makes the biggest difference for myself means very little to the government.

Craig Shaffer

As far as I am concerned, the government has no right to my money, nor do they have the right to determine where it goes. Must be nice to pass laws that work out in your favor. I would rather work side jobs under the table than hand my money to the government and watch them hand it to someone else who has elected not to work for a living.

Jamie

Getting paid under the table is unethical and illegal. I am a single mother who put myself through college. I am considered middle class, but once I pay my bills, student loans, and day care I have pennies to live off of each month. My daughter's father is court-ordered to pay child support, but works under the table to avoid having to pay child support and the child support system does nothing about it.

I get up and go to work in the morning to handle fraudulent insurance claims. I have claims with mostly immigrants. They claim lost wages for "self-employed" jobs. They are on Medicaid and do not pay anything back into the system. We taxpayers are paying for these people who are here illegally and hoping that there is enough left over so that when we get old we can retire and have medical benefits or social security. These employers should be ashamed of theirselves giving jobs to people who are here illegally to save themselves a few bucks while putting American families further into poverty. I have nothing against immigrants. My grandparents immigrated, but they did it legally and have been tax-paying citizens since they got here.

jeff

You mean pay the government money for a pointless war?

alex

With all the waste on government spending, it's no surprise that more and more people of all ages are looking for jobs that pay under the table. There is no shortage of things one can do to earn a cash-only income:

Dan

My friend works for a big night club they don't pay their bar staff; they only work for tips so somtines they work 5 hours and don't make anything and then are expected to tip out anywhere from 3% to 5% of their sales. The barbacks get paid but under the table plus tip out. How can I stop this exploitation--can I report them and if so how do I do this, and what would happen to the business owner?

John

I have worked part-time for a plumbing company, doing hard manual labor part time for the past two years and getting paid under the table. I enjoy it because it puts extra cash in my hands, but I worry about it at the same time.

Usually I get paid in cash at the end of a shift, but when business gets slow I have sometimes had to wait in excess of three weeks to get my money, only after making dozens of phone calls inquiring about it. The nature of the work can also be somewhat dangerous at times, requiring me to be in the bottom of 6'+ deep pits that could collapse in on me at any minute, working around gas lines, etc.

If anything were to ever happen to me, I would be screwed. I do not doubt for a second that my employer would deny any knowledge of my working for him just to escape any health care or legal costs. However, at times I take the risk because I need the money and it pays a hell of a lot better than getting a part time job at a grocery store or fast food joint on the side.

I do believe though that small businesses are allowed to pay their employees under the table up to a certain dollar amount per year. Something to the tune of $500 or $1,000. I worked at a bike shop that would pay me this way in the slower months to save a bit of tax money.

Pat

It's obvious that government can't pay itself under the table if taxpayers are doing so; in the competition for privileges, only government has that entitlement, so government wins.

Isn't that what earmarks are all about?

David

My daughter got a job for a guy who owns four small businesses. He pays his employees "under the table." This guy, criminal that he is, told my daughter he would pay her minimum wage, minus what the government would take out in taxes, although no income is being reported. What a dirt bag. I just found out about this and am trying to decided whether I want to go into his store and put my foot in his ass or just report him to the appropriate authorities. Either way, my daughter will no longer be going to work for that criminal.

kristina

What I want to know is how do you get someone for working without a license by cleaning houses and they do not pay taxes? Look at all these other companies that have to pay for taxes and have to have a license to keep their business running, so why do some people get away with it? I do not think that is fair at all. I think for you to have a company you, need to have a license, and if you do not I think you should get in trouble with the law for it, because it is not fair to others here in the United States. So how do I go about dealing with something like that?

Angela

I didn't read every single post so I don't know if this was brought up already...but one concern regarding paying someone under the table (besides the whole tax issue) is child support. I know guys who only take under the table paying jobs so their jobs aren't reported to the Labor Board so they can escape child support enforcement.

Sherri

We all have different points of view on our government and the way it works. Some of us choose to abide by the law and some choose to line their pockets and scam us all. How about someone collecting unemployment and workiing under the table? Double dipping! So, you pay for him to collect monies, be on food stamps, get free medical for his child and he, well, he is making bank. Because he has no moral apptitude. Sure some of you think it is fine to lie, cheat, and steal, but in the end run it's those of us who abide by the laws, do the correct thing and get screwed by you in the end. Is the government punishing you for cheating? No, they punish the honest tax payer who works for a living, pays their fair share of taxes as stated by our laws, and wants to do the right thing. So the next time you decide to cheat and steal and avoid paying your fair share of taxes by paying your employees improperly and not always by their choice, you put them in a situation so that in the event they are out of employment at some time in their life they cannot collect unemployment benefits that they would have coming to them. Whether some choose to believe it or try to justify it in their own corrupt way it is illegal to pay under the table and get paid under the table. Period!

wanted justice

If I work in a different state but get my checks from a different state, could I get caught for not paying taxes? For example, I work in New Jersey but get paid from New York. I am working under the table and collecting Social Security.

Johnson

If you took away my right to earn a living unencumbered by governement, you and I would be at war.

Wake up, America.

Deft

If businesses aren't paying taxes, how will government fund essential services like bailing out Wall Street banks and failing auto companies with lavish union pension plans? Funding dictators in Third World countries and maintaining military bases in 130 countries takes a lot of money. Also, how will they fund all their socialist programs like Welfare, HUD, Social Security, and Medicare that are nowhere in the Constitution? Yeah, every company should pay their taxes.

Elaine

I need to know where to report an employer who is paying employees under the table. This employer was also paying employees who were receiving unemployment checks every week for over a year. Could someone provide that information?

Ralph

It's a cutthroat world and there are far too many companies and factions to police them all. I live in Oregon, and believe me, we need any and all the help we can get in this state.

greg hope

Just to move the discussion along, the federal government should crack down on employees that work under the table.

Tax withholding employers enjoy a vast network of risk control benefits (including the military) that rely primarily on the continuity of faithful employees. Pay in full would release workers from those risks. Then, the risk control benefits would be required for them.

If past enforcement is any indication, such “crack down” would raise independent workers to unimaginable heights.

me again

A protest goes, "wages are not income because labor is exchanged for them."

Unencumbered by government?

One rails against government interference. Consider witholding income tax against under the table pay.

To determine an income, a value need be transacted. Gross pay is such a valuation, but not transacted until net pay is accepted. Under the table pay is gross pay that is offered, and transacted by its receipt.

That’s as far as I got. If you need me, I will be hiding under a polar bear in the Arctic.

Dave

This whole problem of tax evasion wouldn't be a problem if taxes didn't exist. I mean, high taxes are only a greater incentive for people to cheat on them.

We get taxed when we get money, and we get taxed when we spend it. Personally, I won't mind a 10% income tax at all. But when it hits the 25% bracket, it's a little outrageous. I have to pay 25% of my pay (which isn't that much for that bracket), but yet I'm not eligible for things like tuition assistance for college. I get to pay taxes, but I see little of it in return in the form of government services.

No wonder people like being poor. They don't need to work, don't need to pay taxes, and on top of it all, they get financial assistance from the government.

No wonder our country is circling the drain, we're punishing those who contribute to our great nation and rewarding those who don't.

bc

It's obvious that government can't pay itself under the table if taxpayers are doing so; in the competition for privileges, only government has that entitlement, so government wins.

I couldn't agree more with this statement, and all these people asking where they can report employers who are paying their employees under the table should mind their own biz if people keep reporting people there aren't going to be any under-the-table jobs for people who need them like people working under the table to avoid paying corrupt child support payments or people who need under-the-table jobs for other justifiable reasons.

Whether the government makes it illegal or not, people still have the right to work under the table and they're going to do it whether certain people like it or not. Just don't be stupid if you get an under-the-table job, don't go around telling everyone where you're working and what your doing even if it's people you think you can trust, because they might end up reporting it.

and again

Never confuse gross price with net price.

Gross price includes all the UI, retirement, insurance, profit, credit, government, mitigation of damages, ethics, more perfect union, justice, domestic tranquility, the common defence, the general welfare, and the blessings of liberty to ourselves and our posterity.

Oops, did I say price? I meant pay. Never confuse price with pay.

criminal

I live in California and I am unemployed. The thing that really sucks is that the last 2 employers I have only hired peoiple under the table because they don't want to pay for the additional disability insurance (or they can't afford it). I have asked to be put on the payroll and they refuse.

If I don't accept the work, someone else will. It's as simple as that.

This is the norm is my line of work. In my line of work, most employers never put new hires on the payroll. It's always "cash only."

In addition to avoiding the higher disability insurance, this also benefits the employers because, as an employee, you cannot claim unemployment benefits when you are laid off either.

Also, if you get hurt on the job, you're screwed because you are not covered under state disability. This is especially true if you are receiving county health care benefits and working under the table. If you get seriously hurt at work, you will not be able to go to the county doctors--you will have to pay out of pocket. The employer will be off the hook because, technically, you are not their employee.

Please note: I am a college graduate from a 4-year university in business administration.

greg hope

Congress has power to lay and collect taxes on incomes from whatever source derived. It has laid taxes on some incomes but not others, which amounts to unequal enforcement of the law.
If the power was changed from whatever source to any source, congress would have to name which incomes are taxed and which are not.
Then, workers would be better informed to choose between one and the other.

me again

My biggest problem with under the table pay, I mean if it goes on and one doesn’t get caught, is the lack of any records one can produce.

One simply disappears from the workforce. It is very frustrating and anxiety producing to justify the absence when looking for work, even if prospective employers don’t care. It is not conducive to mental health.

Perhaps if we wished to be serious about healing the recession and allowing people free enterprise, we would find better ways than self-incrimination to make taxation work.

greg hope

Claim the pay, and pay the taxes. You’ll be the good guy.

jusme

Well, on my end of the situation of being paid under the table, I work for my ex-inlaws. I get paid on check, pay my taxes. My ex-husband works for them also. He gets paid under the table. He is supposed to pay me child support, but due to the fact they pay him under the table, I dont get anything and I'm struggling to make ends meet and support my children. Now what? This needs to be stopped and the companies needs to be penalized, along with the person who is getting paid under the table!

ADRIAN MCCALL

I have been working for years under the table, making $5 an hour. And I can't do it no more. The game is over. I should be a slave, working back in the day. What can I do?

Bernhard Wiebe

I think the government should leave people alone before there is a bloody takeover of this country by its pissed off citizens.

sharon

Why should I pay taxes when they don't let us drill now--want to tax our every mile when there is already a gas tax.

joe

Income tax is illegal. But yet everyone pays it. There is no law that states we are to pay income tax. Everyone should stop paying a government who steals billions of tax dollars to pay for criminal activity. It makes no sense. I don't pay my bills--I file bankruptcy but when a bank runs itself into the ground, they get free money.

Wesley Mcgranor

The under-the-table laborer has the option of filing his own taxes. I am working poor--I make under the $10,000 national stipulation and the $9,000 state stipulation for Missouri. Under-the-table labor may be unusual--but it is of liberty. I will not--and I urge all to stay the course and labor without the welfare-managerial state. As a paleoconservative--I applaud the ninth circuit court's decision to not impede 'day labor' as suspect of illegal immigration as well.

the Bartender

Who do I report a business paying under the table to?

Wesley Mcgranor

I do yard work six months out of the year. I have worked on occasion for others--and I made sure they understood that I got paid cash--under the-table. You can work free from payroll with or without paperwork. Under the table labor is not illegal. Once I did dishes at a local resturaunt and the owner paid me under the table. Some of the other employees heard about that and they wanted to get paid under the table as well. The boss declined. The self-employed work under the table a lot, despite societal norms. Even if one files--if they make around 20.000$ a year--they do not pay taxes anyway. I do not support the 'fair tax.'

Tommy

I'm glad I found this article because I have a couple of questions and I could really use some feedback from both sides. It's a little off topic but listen. Ok. So, first of all, I am a working college student. I am a few classes left from graduating with my Bachelors degree (in Environmental Science). This semester, I am going to school part-time so I can focus on getting a job in my field of study. And also because it's less strain financially.

Now, my dilema... Do I put my "under the table" job on my resume? I've been there for 4-5+ years on and off. Worked for two years, found a new "pay-check/legit" job through a temp agency (more hours, more pay) for about a year. Then went back to old "under the table" job. Been there since about 2 yrs ago. I left the job at the temp agency because I was working 12 hour graveyards hard labor AND going to school full-time, wore me out.I needed a new job pronto and my boss wanted me back.It's almost impossible to find a job in this town if you don't have any connections.

Now, my question: what do I do now? do I put my "under the table" job on my resume? I know I sure as hell don't want to get my boss (or me) in trouble because he's helped me out a lot by giving me this job, which in my case is a matter of putting food on the table and having a roof to sleep under. But, I am just a little nervous about listing it or either having large gaps in my employment history. I don't want employers to think I've been sitting on my azz doing nothing every other year if I claim to have strong work ethic. I've had "paycheck/legit" jobs since high school, it's just that my most recent and longest employment is under-the-table. I mean, I pay for my own education and take care of the bills in this house. My parents are old, dirt poor, and work seasonal agricultural jobs and I live in a small poor town where there are few jobs, mostly agriculture and fast food.

Well, if I do list it as a work experience, should I write it off as a weekly, no wage cash job, help at family friend business kind of thing. becuz, it really is kind of..? :/

Wesley Mcgranor

Tommy, your under-the-table job is not any less 'legit' then your payroll one. The state and federal tax system is based on voluntarily filing after you make a certain amount--it's 'up to you' to keep track of what you are making. Social Security and Fica are another matter, and if you are concerned as how to go about paying such, contact the proper agencies.

Johnny

L.K. from San Jose, CA got paid under the table making $7 an hour working over 70 hours per week at Subway Resturant in Alameda in 2010, and now he is on the regular payroll for that resturant. Could he still get in trouble from last year? The employer is too smart they can hide it.

glenn

I live in Hawaii. How do I file a complaint against businesses paying workers under the table?

Greg Hope

In answer to your question, Glenn, I took the obvious step of searching the IRS website. But lo and behold, that is not an FAQ. Nor is there a means immediately available to pose that question to them.

Your tax dollars at work.

Wesley Mcgranor

Mr. Hope -- see my above comments.

Greg Hope

Mr. McGranor--first, I thought 'oops'. Looking at it again, difficult work to keep citizens from each others throats. So, there you go. Your tax dollars at work!

Melody

RE: Bernhard Wiebe
July 4, 2011 12:19 PM
"I think the government should leave people alone before there is a bloody takeover of this country by its pissed off citizens"

What do you think Occupy Wall Street is about.?

The 99% people!

Anonymous

The government is an unlawful criminal terrorist organization; you shouldn't be paying any taxes to it whatsoever.

mykijune

Before a local or state government can worry about those not reporting income, it should stop giving back revenue from sales taxes to people from other countries when during their time in the United States they used public services, roads, and facilities.

mykijune

The real reason the government will never do anything about under the table transactions is becuase it does not want to upset the very people (the true majority in this country) that will actually do something about it, like revolt.

greg hope

We are revolting!

Pro. Federally legalized businesses enjoy extreme taxpayer-funded advantages. For example, trade in alcohol, tobacco, and firearms is regulated, while trade in marijuana is not. As a result of that, marijuana is illegal, costly, bad, and poverty inducing, while alcohol, tobacco, and firearms are legal, cheap, good, and definitely prosperity-inducing.

Since federal regulation has shown itself to make declared enterprises run smoothly, I ask them, please, "crack down" on whatever it is I am secretly busy at!

Penny to Penny

I used to be against under the table pay--however being a recent Masters Degree graduate, without a job to be found (not that I haven't been looking full time) I took a part-time under the table job so that I can pay some bills. I will admit I also am on Foodstamps and WIC so that I can put food on my table for me and my son-- did I mention I'm a single mom? If I were to pay taxes on the meager pay I get under the table, I would not be able to pay my rent or my mounting student loan bills. I am educated, and I used to be part of the middle class, but have now fallen into poverty because I decided to further my education and now with the economy in the pits I can't find a job. So yes I work under the table just to get by. Can you really tell me I should pay taxes and not be able to afford my rent--what would that make me, homeless?

greg hope

Thank You, Penny to Penny, for giving me this opportunity to respond.
I am still Pro: Undeclared payment is secret, by definition. It's data is not recorded. Recorded data is used to decide what to do. What is a job-deprived, struggling, poverty-stricken single mother? It is not a legally recognized occupation, making it immaterial and unregulated. Thus, it is not the state's (our)problem.

It could be.
All such occupations should be. The law would then be obliged to take the data from those jobs, all being innocent until proven guilty, under consideration whenever raising revenue, actions, and requisitions are proposed. I know I am way in the abstract in the position I have, and it is a bubble likely to be easily burst. But, being torn from loves, broke, unfed, unwashed, homeless, and invisible is more of a cold, hard situation in which for a citizen to be.

That is what should be illegal.

barb

I work for minimum wage and pay my taxes. Some chick showed up and got hired for $15 paid under the table -- she does not pay taxes. She is breaking the law with working illegally and gets the benefit of tax free. No wonder she can afford a $650 purse.

Greg Hope

I did work for a contractor who withheld taxes, but I never got my refund.

Not only did he have use of the money in the meanwhile, he got it all, in the end.

If withheld taxes were paid into revenue along with the net paid the earner, the government and earners would be in no need. Instead, that money is chipped-away by business deferral, profit, and low prices.

That is why I say, the government is already down on payments, so it should also be down on receipts.

We blame ourselves for failure, when in fact it is accountancy’s fault.

James

Getting paid under the table allows deadbeats to avoid child support payments until they get injured on the job. Then they can collect social security disability and continue to fraud the government by going back out there, and working under the table again without reporting it to social security. My sister's ex-husband has done exactly this while my sister has spent the past 9+ years working two jobs to raise two children by herself.

Greg Hope

My father was one of those deadbeats. He screwed mom out of child-support (four children). I was raised to work for him under the table. While I was paid handsomely, he did me out of all kinds of insurance benefits.
I blame myself, first. I should have called myself self-employed and paid the insurance premiums (taxes). (Dad would never have stood for that.)
Now, I blame Insurance: All of it should be either mandated and single-payer; to level this field. Or, not at all.
And, Accountancy isn’t innocent. It should have stopped this nasty game by now.

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