House Committee on
Ways and Means
Opening Statement of The Honorable Richard Neal
May 08, 2007
“Thank you, Chairman McDermott. Author and
publisher Elbert Hubbard wrote that, “We work to become, not to acquire.” For
many of us that is true -- our work is much more than a paycheck. From it, we
derive satisfaction and a sense of responsibility.
“I remember very well
one of my first jobs, when I was just 17 years old. I worked in the hardware
department of Two Guys department store in Springfield, Massachusetts. Two Guys
was a great place to work. Not only was it a discount store, but it also had a
bowling area in the back where kids loved to hang out.
“Despite the fun
of working there, I recognized that my job was a tremendous opportunity and
responsibility. And I think most workers treat such opportunities the same –
eager to get to their tasks and perform well.
“But as we will hear today,
some fall victim to misclassification. Some are so eager to work, they simply do
not hear that they are not employees. Some are disadvantaged or may have
language barriers, and do not understand the implications. Many do not
understand the law in this area.
“Even Treasury and the GAO have
acknowledged that the law is confusing and conflicting.
“And, according
to the testimony we will hear today, some have stepped into this gray area to
take advantage of that uncertainty.
“It also seems clear, though, that we
must do something to reverse the trend. The GAO estimated that misclassification
results in federal income tax losses of $4.7 billion in one year. Other experts
have found that my home state of Massachusetts loses hundreds of millions in tax
revenue each year from this problem.
“Legitimate businesses that play by
the rules are also hurt here. We are fortunate to have with us today one of my
constituents from Springfield, Mr. John Kendzierski, a drywall contractor for
almost three decades.
“John will tell us he is at a disadvantage when
competing against contractors who treat all of their workers as independent
contractors. Thank you for sharing your story with us today, John.
“I
look forward to all of the testimony today. In addition to suggestions about
refining the law, we will also hear recommendations that additional reporting
and perhaps additional withholding may help address some of the tax gap and
non-compliance issues surrounding independent contractors.
“It is my
hope that the testimony today will help us find some reasonable solutions to
deal with this problem.”
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