Zero tolerance on under-the-table work

Zero tolerance on under-the-table work February 10, 2017; public domain

Rep. Mick Mulvaney, President-elect Donald Trump’s pick to lead the Office of Management and Budget, disclosed in congressional documents that he did not pay more than $15,000 in taxes for a household employee.

That’s according to Politico.

Labor Secretary nominee Andrew Puzder acknowledged Tuesday that he had employed a housekeeper who wasn’t authorized to work in the U.S., as the Senate’s top Republican came to his defense and dismissed the issue as a “mistake” that had been fixed.

That’s from the AP report.

President-elect Donald Trump’s pick for commerce secretary [Wilbur Ross] admitted at his Senate confirmation hearing Wednesday that he recently fired a household employee who could not provide proof that they could legally work in the country.

This is from the Huffington Post, though its not clear that in this case Ross is in the wrong here, if he’s being honest.  In his telling, this employee provided a Social Security card when first hired, but Ross, in the confirmation process, asked all his employees (because he’s a billionaire and has a dozen “household workers”) to re-verify their work eligibility, and he fired the one employee who was unable to provide the needed documentation.  The odd thing in the reports on Ross is that the tone is more an expression that the worker was somehow unjustly fired, e.g.,

Trump won the presidency with a promise to round up and deport the millions of undocumented immigrants in the U.S. . . . So Ross’ employee of seven years faces not only unemployment, but deportation as well.

As Politico reports,

Political scandals surrounding the employment of undocumented domestic employees, or failure to pay employment taxes on household workers, date to the Clinton administration. In 1993, these issues sank two consecutive nominees for attorney general — Zoe Baird and Kimba Wood — in what became known as Nannygate.

Now, I’d be all for a zero-tolerance policy with respect to hiring nannies or other “household staff” under the table.  And I don’t just mean that with respect to whether potential cabinet secretaries have their confirmations sunk.  I mean that there should be some genuine enforcement here across the board.  How to implement this I couldn’t say – do you conduct “sting” operations in which nannies turn in employers who offer to pay them under the table?  Have the IRS scrutinize high-earning dual-income filers with young children who don’t report nannies or childcare expenses?  (How would you prove they’re using a nanny rather than grandma?  Watch the house to see who shows up in the morning?)

And this is, reportedly, occurring on a massive scale.  A 2012 survey, as reported in a 2014 Atlantic article (sorry, the most recent I found) said that 91% of nannies report being paid under the table.  A 2010 doctoral dissertation calculates noncompliance rates of between 74% and 97%, depending on methodology (p. 123).

And these are just the household workers.  How many more under the table workers are there, working as roofers, dishwashers, day laborers, and so on?  One estimate is that there’s a $2 trillion shadow economy.  Regardless of whether they’re working under the table because they’re unable to work legally, or because they want to avoid taxes, or want to collect means-tested benefits like food stamps or Medicaid, they are cheats; and regardless of whether they want to save on taxes themselves or cut corners on other regulations, their employers are cheats — and they’re enabled by the notion that this isn’t hurting anyone, and that it’s just sticking it to the feds and being clever to avoid taxes.

Why can’t we step up enforcement?  I suspect there’s just not enough will to do so, and that too many people think that the actions that would be needed would be to invasive.  But this is 2017, and this is the United States, not some Third World country.  No complaint that “it’s too complicated” can be taken seriously, given the ability to simplify the whole process with the right software, website, or app.  And the government could even give early-warning of stepped-up penalties and enforcement by using the tax return process to send warnings to taxpayers that, as of a specified date, failure to pay employment taxes for employees will have serious consequences, even if you’re not a future cabinet-hopeful.

Bottom line:  it’s time to put an end to this.


image:; public domain

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