The Losses Keep Mounting

More than $8.4 billion a year is lost to Construction Industry Tax Fraud! Watch the losses climb, from Jan. 1, 2017 to now. 

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Fresh Evidence of Tax Fraud’s Toll

By Douglas J. McCarron
General President
United Brotherhood of Carpenters

Everyone in construction knows about the illegal business practices that are undercutting our industry.

Tax fraud, wage theft, shady banking practices, insurance fraud, labor brokers and the intentional misclassification of employees are widespread and being used on projects of all sizes in nearly every market in North America. These practices cheat taxpayers who pay their fair share, and hurt legitimate, law-abiding contractors, who have trouble competing.

Now we have fresh evidence showing how construction industry tax fraud also hurts workers and their families.

A study released just weeks ago by the University of California Berkeley Labor Center revealed that 39 percent of construction worker families nationwide are forced to enroll in one or more safety net programs to make ends meet. That is a huge and disturbing number and is significantly higher than the 31 percent of all working families enrolled in such programs.

The safety net programs are just that: they exist to help families address basic needs. Programs include the earned income tax credit, Temporary Assistance to Needy Families, Adult Medicaid, Children’s Medicaid/CHIP or Supplemental Nutrition Assistance Program.

Not only is this an infuriating indication of the plight of thousands of vulnerable working families, but it is needlessly costly to all of us, as the yearly cost to state and federal governments is a staggering $28 billion.

The UC Berkeley researchers also studied individual states and found similar figures. They attribute their findings to low pay, wage theft and illegal employment practices in the construction industry. 

We already knew the scope of the problem, thanks to a 2019 study, which estimated that some 2.16 million construction workers are paid off the books or called “independent contractors” when they are really employees, with an annual revenue loss of $8.4 billion to state and federal taxpayers. That’s only part of the story, and you can learn much more about the crisis by browsing this website.

This is not only a crisis in the United States. In Canada, crooked residential contractors are the largest component, at $16 billion, of the country’s $61.2 billion underground economy.

The only way we can make a difference is by continuing to raise the alarm, educate the media and the public, and continue to work with policymakers and law enforcement agencies to close the door on the criminal enterprises, large and small, that are poisoning the construction industry. 

With our combined voices, we will continue to educate city and county officials, state and provincial legislators and tax regulators, and those elected to Congress and the Canadian Parliament, so they understand the breadth of the tax fraud crisis.

When they learn about the extent of the damage, these officials are better equipped to make a stand against it. After all, these are the people who decide things like who secures construction contracts and how to allocate resources for enforcement of employment tax laws.

In a couple of weeks hundreds will participate in this year’s events for Tax Fraud Days of Action. This is the fourth year that our regional councils will lead events to focus attention on the problem, and we can’t let up, as so much more needs to be done.

Please join us, tell your friends, and help us bring an end to tax fraud in the construction industry.