What loophole, you ask?
It’s called “employee misclassification,” and it’s an all-too-common tax dodge in today’s responsibility-free corporate America: to avoid having to pay the taxes and providing the benefits the law requires for their employees, corporations simply declare those employees “independent contractors,” a category for which these obligations do not exist.
Today the tax code offers misclassifiers a “safe harbor” if everyone else is behaving badly too. So it’s good to hear that Senator John Kerry, along with several of his Democratic colleagues in that chamber, are mounting a charge to close this egregious loophole in the law:
Senator John Kerry (D-Mass.) today introduced legislation to provide workers with the rights they deserve. A current tax loophole, which allows employers to misclassify some workers as “independent contractors,” denies employees valuable rights and protections. The Taxpayer Responsibility, Accountability and Consistency Act of 2009 will ensure workplace protections such as workers’ compensation, Social Security, Medicare, overtime, unemployment compensation, and the minimum wage are afforded to all employees.
The bill is co-sponsored by Senators Dick Durbin (D-Ill.), Tom Harkin (D-Iowa), Chuck Schumer (D-N.Y.), Sherrod Brown (D-Ohio), Bob Menendez (D-N.J.), and Paul Kirk (D-Mass.).
“This is about leveling the playing field and ensuring that America’s workers receive the protections and pay they deserve,” said Sen. Kerry. “We cannot continue to reward businesses who refuse to play by the rules.”
Indeed — and on top of stopping corporations from breaking the rules, closing the misclassification loophole would help narrow the budget deficit as well. Letting corporations weasel out of their tax obligations today just kicks more of the deficit down the road for our children and grandchildren to deal with tomorrow.
Senator Kerry’s bill is S.2882. It’s a slightly modified version of H.R. 5804, which was introduced in the House during the last Congress by Rep. James McDermott (D-WA). Both houses should take this opportunity to stand up for workers and taxpayers and vote to close the misclassification loophole.