Business: Tax-Free G.N.P.

A cobweb of rules creates a subterranean economy

Winter is i-cumen in. Johnny clears the snow from Mrs. O'Leary's driveway and makes five bucks. Does the IRS hear about it? Of course not. But Johnny's income—unreported and untaxed —is part of what Economics Professor Peter M. Gutmann of New York's Bernard Baruch College calls the "subterranean economy" of the U.S., with a G.N.P. that he calculates at $195 billion for 1977.

In a recent issue of the Financial Analysts Journal, Gutmann argues that there is in the U.S. nearly $400 in cash per capita floating around outside banks. With checks and credit cards,...