|Dishonest contractors are cheating taxpayers of millions of dollars and undercutting the livelihood of employees and law-abiding competitors. Regulators who are supposed to curb this type of abuse have done little to stop it.|
By deliberately and illegally classifying construction employees as "independent contractors," these companies avoid paying unemployment, workers compensation and withholding taxes, among others. The extent of this abuse was documented in The Raleigh News & Observer and the Charlotte Observer as part of a larger series by McClatchy newspapers. The impact is mind-boggling.
Since 2009, the newspapers estimated that North Carolina contractors have cost state, federal and local taxpayers $467 million.
The problem extends beyond the taxman. Workers are cheated out of health insurance, workers compensation should they be injured on the job. The company doesn't pay into unemployment insurance designed to cover workers who are laid off through no fault of their own.
Many of these companies do not withhold payroll taxes, either, meaning that workers don't get credit for paying into Social Security. These "independent" workers often are paid in cash, many of them vastly underreport their income – thereby shortchanging Uncle Sam and the state kitty.
Moreover, companies that illegally cut corners often can underbid honest contractors who obey the law. Over the years there have...
Thursday, September 11, 2014
Editorial - Unscrupulous businesses hurt workers, honest competitors and economy
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