IN NEW HAMPSHIRE, we know that the most important thing in life is freedom, and we also know that freedom comes with great responsibility. That means we don’t stand by when something bad happens to our community.
The construction industry is hurting local workers, regional businesses, and the people of New Hampshire and something needs to be done.
Each day, criminal contractors commit fraud by neglecting to pay their fair share of employment and payroll taxes. Instead, they pocket the money . It costs the U.S. $2.6 billion a year in lost federal and state income, or $80 every second.
These schemes are commonly done through shady bookkeeping. It is estimated that 1.2 million workers are paid “off the books” each year, which is how contractors intentionally avoid their legally required tax obligations. This unaccountable method of hiring workers also means that job sites can be unsafe, contractors commit wage theft and workers lose out on benefits like overtime, workers’ compensation, unemployment, Social Security, and retirement.
Another technique used to cheat the books is to mislabel someone working a full-time employee’s job as an “independent contractor.” Approximately 300,000 construction workers nationwide are misidentified in this manner, meaning they pay the tax and other employment obligations instead of their employer.
In New Hampshire, this is an issue of increasing concern. According to the New Hampshire Department of Employment Security, the number of misclassified workers has risen by 150 percent in the last few years. In February of this year, a project in Keene had $64,000 in fines for 130 labor law violations, many of which were worker misclassification.
Unfortunately, criminal contractors gain up to a 30 percent advantage on labor costs when they shortchange workers and skip out on their taxes. They use low bids to attract jobs and businesses who are honest and pay workers fairly simply cannot compete. The construction industry as a whole then suffers from these artificially low prices for work.
The public should be very concerned about these practices because in the long run, tax fraud harms public services funding. Education, infrastructure, Medicaid, Social Security, and first responders lose out when funds generated through local, state, and federal taxes aren’t paid.
Our education system needs help , so much so that some students have to be tutored in converted bathrooms. If we stop contractors from stealing our tax dollars, we can secure more money for our kids and do so without adding to the deficit.
State and local leaders and workers have made it clear that this behavior is taken seriously. Senate Majority Leader Dan Feltes, Manchester Mayor Joyce Craig, Nashua Mayor Jim Donchess, honest contractors, victims of worker exploitation and union carpenters joined recently to educate on this issue and discuss ways to protect local funding against these criminal schemes.
Across the nation, union and non-union workers rallied to the streets on Tax Day and took a stand against fraud in the construction industry.
New Hampshire deserves its lost tax dollars back. State leaders need to ensure that criminal contractors and developers are being watched and appropriately punished. Our representatives need to be encouraged to continue to fund the IRS and Department of Labor so they have adequate means to monitor for construction tax fraud more closely.
We need to advocate for and support developers and contractors that are doing the job the right way, because it helps our workers, our local business owners and our community services funding.
For more information on the New England Council of Carpenters visit www.nercc.org or visit The UBC National Stop Tax Fraud Website to learn more about construction industry tax fraud.