Thursday, December 08, 2005

Are contractors paying their fair share?

With all of the money being earned by contractors in and around New Orleans, and with cuts being made to public services, citizens should be asking if all of those contractors are giving anything back to the communities who pay their bills.

The reality is that many contractors aren't licensed and aren't paying taxes on their income. There's no enforcement, so anyone who wants to can easily get around their tax obligations. How much foregone tax revenue might be lost? Well, what's a reasonable number to put on the cost of rebuilding New Orleans? $200 billion? The sales tax revenue on that sum at 9.5 percent would be $19 billion. If, conservatively, 20 percent of workers aren't paying taxes, then the City of New Orleans and the State of Louisiana collectively are losing $3.6 billion.

To put that in perspective, the State of Louisiana is facing a $1 billion shortfall in revenues this year. The City of New Orleans budget is something like $300 million. The New Orleans public school system was running a shortfall of $40 million before Hurricane Katrina.

This is just one more example of how the city and state leadership is totally AWOL. There are probably other ways to force compliance, but it would be easy to require all contractors to display a license in the windshields of their trucks so that it would be easy to spot freeloaders.


At 12/08/2005 10:45:00 AM, Anonymous YatPundit said...

the problem with unlicensed contractors is similar to the problem with Wal-Mart. People often hire the unlicensed guys because they're significantly cheaper than the legit ones. Look at the hue and cry about building permits in Metairie and Kenner when regulators tried to get involved in the rebuilding process. It would be the same if there was a contractor crackdown.


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