The construction industry is part of the lifeblood of our communities—a source of jobs and prosperity for workers and contractors, and an engine of economic development and public investment.
It shouldn’t also be a source of exploitation and illegal conduct, including wage theft and tax fraud.
But crime is rampant in the construction industry, and the losses keep mounting.
That is why UBC regional councils and members are once again organizing events across the U.S. and Canada for Tax Fraud Days of Action, April 11–16, to educate policymakers, the media and the public about tax fraud in the construction industry.
The most recent look at the effect of “low road” construction business practices on workers was conducted by the University of California (UC) Berkeley Labor Center—and it paints a devastating picture:
In the United States, some 3 million construction worker families are enrolled every year in public safety net programs such as Medicaid, the earned income tax credit, temporary assistance for needy families and the federal nutrition assistance program. The cost? $28 billion every year.
(Read more about the UC Berkeley study here)
Other recent studies in both the U.S. and Canada have demonstrated the broad impact of illegal conduct in the construction industry.
In 2020 an authoritative study found that as many as 2.41 million U.S. construction workers are illegally paid off the books or misclassified as independent contractors. Using mid-range estimates, the federal and state tax losses are $8.4 billion a year. Employers steal nearly a billion dollars in wages every year—and dump their obligations to pay $3.5 billion in taxes onto workers’ shoulders.
In Canada, the underground economy accounted for $61.2 billion of economic activity in 2018. In Ontario, $3.1 billion in federal and provincial tax revenue is lost to fraud every year. Quebec’s revenue losses come to $1.5 billion, and in British Columbia, taxes that go unpaid by independent operators reach $308 million.
The Tax Fraud Days of Action campaign is making a difference because of the work of UBC members and regional councils.
In Canada, the UBC has had success educating key officials and continues to advocate for meaningful federal government support to combat tax fraud and the underground economy.
In the U.S., stronger laws have been passed in numerous states; federal and state agencies are beefing up enforcement; and prosecutors are filing charges against the lawbreakers.
But we won’t rest until construction industry tax fraud is eliminated. Please join us.