Getting paid 'under the table' will hurt you long-term

Listening to an angry group of construction and government leaders this week put a new spin on an old problem - the "underground economy," which continues to thrive in all sectors.

We tend to blame the government and its high taxation rates for wages paid "under the table." And we continue pointing the finger at illegal alien workers who accept their pay in cash from unregistered contractors. What we don't like to do is take responsibility for our own part, which is agreeing to pay someone "under the table" to avoid paying taxes.

The government loses billions of dollars in tax revenue each year from the underground economy. This, in turn, negatively impacts insurance premiums, medical coverage and investment in apprenticeships.

 OK, so that's a well-understood fact - which no one is doing anything about. Let's start at home, shall we. For example, you want to finish your basement; let's look at some quotes on drywall, taping and ceiling spraying:

  • A big contractor wants to charge you $7,800 including tax.
  • The plumber with one year of apprenticeship training can do the whole basement for $6,795 including taxes.
  • The independent carpenter charges $5,400 without tax, cash only.
  • Your next-door neighbor will charge $5,100, cash only.
  • The certified electrician is charging $3,000 more than your brother-in-law handyman.

You like the money you save from paying 'under the table' - it's enough to get you that new cedar deck you've been pining for, constructed by a couple of students who give you a quote to either pay $4,100 plus tax, or $3,500 cash only. This scenario could also include the yard maintenance guy, the window washer crew, the fence builder …

I'm pretty sure I'm not the only one facing these kinds of tough choices as a buyer. My household budget is always tight; my kids need education, housing, food. My wife says we need a vacation, our car needs a tune up, and the dog should be fixed.

"I'm already paying enough to the government"

I could use the saved costs. "I'm already paying enough to the government," I think. I want to go with the lowest quote without the extra taxes for my home reno work on the weekend.

Monday morning, it's back to the world of business and trade, where we face an urgent situation: The need for long-term planning to replace an aging workforce in an increasingly technologically skilled society.

Solving that labor problem is going to take big-time capital investment by governments. Where is that money to come from? Riiiight - taxes.

If we can not collect enough tax revenues to re-invest in world-class training facilities for skilled workers, we'll end up losing business to countries that have invested wisely in future labor, and/or try to persuade workers from other global economies to join our aging workforce.

But - if we all said 'no' to the temptation of "underground" work, we could build a stronger economy together.

I'll lead the way - I'll choose the trained professional who gets paid above-board (taxes et al). My family will foresake fixing the family pet. (I think he might be glad to dodge the bullet for another year!)

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