THE UNDERGROUND ECONOMY-STATE REVENUE AND CHILD SUPPORT

The underground economy is said to be costing Michigan billions in lost taxes and revenue each year according to an article in the Detroit Legal News.

The underground economy is based on businesses and people conducting business “off the books” and paying employees “under the table.”  This is done in an effort to avoid paying taxes on earnings and profits.

It has become such a problem that a task force was created called “Underground Economy Task Force.”   A news report released last week by the Underground Economy Task force says Michigan is losing out on taxes and child support payments because of the “underground economy”.  The report also says the state should make doing business underground more difficult and costly.

Some parents are driven to work “under the table” because they can’t afford their current or back child support payments.  Courts should take action to adjust payments so financially stressed parent’s don’t feel forced to take these jobs.

In turn parent’s who depend on child support payments have nothing to collect because the non-custodial parent no longer shows an income. It is a vicious cycle and the child ends up losing.

One solution to this problem is called “imputation of income.”  Many counties (courts) will impute income to a person, which means that they will calculate child support based on the premise that the person should be able to at least work 40 hours a week and earn at least minimum wage; however some counties, including Wayne, will only impute income to a person for part-time (20 hours a week) at minimum wage.

The underground economy makes it very easy for many people to get out of paying child any child support; or support on what they are actually earning.  This only hurts the children in the end.

Also, because many people are forced to collect state aid to support their children, it ends up costing tax payers and the state a ton of money.

Lets hope that the task force can come up with some good ideas to eradicate this problem!

We would like to hear your thoughts on this issue!  Please leave a comment!

If you have any family law questions please contact Bill Godfrey at Bill@ambroselawgroup.com or call the office at (248) 624-5500

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Filed under Child and Spousal Support, Family Law

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