[Dan12180]

If the employee is paid above the table he and the employer pay matching taxes. If the employee agrees to work for $2 under the going rate for cash both he and the employer save - the undocumented gets to work without the paperwork needed (ssi and other identification) and the employer saves on payroll and on his portion of taxes.

Resturants, construction, small business, farming, are all areas that are prone to the cash only options.

Reform is needed. I don't think any elected official will tackle the issue because change will make someone upset. They need people to accept them to get reelected. I think citizen reforms are the best option.

[kevkrom]

I wasn't commenting on the merits of FICA taxes, just pointing out that they are there in response to the comment that these folks aren't making enough to pay income taxes. Obviously, those being paid cash under the table are skipping out entirely, either as an ilegal or a legal immigrant.

As many of you know, I'm a big proponent of scrapping income and payroll taxes and replacing them with a national sales tax. One of the big advantages, in terms of this discussion, is that the mechanism for making the tax non-regressive (the family consumption allowance which is essentially a refund of taxes paid up to poverty-line spending) is only available to legal residents. So, while everyone's marginal rate is the same, the effective rate for legal residents is less than that marginal rate (and for most people, much, much less) but the effective rate for illegals is the marginal rate.