The Informal Economy Is Becoming Significant

When you pay for a steak at a restaurant, you’re supporting the formal economy. Part of the price of your meal pays for taxes, which in turn pay for schools, roads, police and fire protection, and so on.

If you leave a tip for the server in cash, however, you’re supporting the underground or informal economy. Because there’s often no paper trail of the transaction, and the government relies on waiters to report their own tips, it’s up to the waiter to decide whether he will pay taxes on his earnings.

According to the job.....

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