1. An underground economy in the Gulf?
I was interested to read these paragraphs in a recent New York Times story about the processing of claims being made by victims of the oil spill in the Gulf of Mexico; pay special attention to the part I have underlined:
Glenn Poche, a shrimper, said he had lost 90 percent of his retail business. Despite official assurances that seafood pulled from the Gulf of Mexico is safe, many of his customers “want to wait a couple more years” to be sure….
Diane Poche, Glenn Poche’s wife, said she had received $30,000 from the fund — “just a little drop in the bucket of what we’ve lost” — but her claims for more had been refused, she said, her voice rising. “I sent in paperwork over two inches thick!”
In his response, Mr. Feinberg [the celebrated arbitrator hired by British Petroleum to process the claims] said that the Poches’ claim was for more than twice the annual gross income Mr. Poche had reported before the oil spill and that Mrs. Poche was listed as a housewife, not a business partner, on the family’s tax forms. Mr. Feinberg has said that thousands of claims have been rejected because of inadequate documentation.
So, here’s the possible story: Without drawing any conclusions from this brief description of the Poche family’s dispute with Mr. Feinberg, it may be that much of the economy in the Gulf — small-business shrimping and other fishing, chartering boats, waiting on tables in restaurants, small retailing — is a cash economy, in which some people may make more money than they report to the IRS.