White House Endorses Kerry, McDermott Legislation to Close Tax Loophole That Hurts Workers and Businesses
For Immediate Release: Wednesday, September 15, 2010
CONTACT: DC Press Office, 202-224-4159
WASHINGTON, D.C. – The White House has endorsed legislation by Senator John Kerry (D-Mass.) and Representative Jim McDermott (D-Wash.) to protect workers from losing benefits and protections as the result of a tax loophole.
The Fair Playing Field Act of 2010, which Kerry and McDermott introduced today, will close a tax loophole currently allowing businesses to misclassify workers as “independent contractors,” thereby creating an unfair environment for businesses that play by the rules and an unfair environment for workers. The bill is cosponsored in the Senate by Senators Kirsten Gillibrand (D-N.Y.), Patty Murray (D-Wash.), Sherrod Brown (D-Ohio), Al Franken (D-Minn.), Daniel Akaka (D-Hawaii), Chuck Schumer (D-N.Y.), and Patrick Leahy (D-Vt.)
“When employees are classified as independent contractors, whether by design or because the rules are unclear, they are denied access to critical benefits and protections, at significant cost to government at all levels,” said Vice President Joe Biden. “For these reasons, stopping worker misclassification is a priority for the President’s Middle Class Task Force, which I chair, and I applaud Senator Kerry and Congressman McDermott for introducing this bill. The legislation is timely, as misclassification is an increasing problem, one that puts employers who properly classify their workers at a disadvantage in the marketplace and costs the government billions of dollars in unpaid taxes. I urge the Congress to stand up for workers and create a level playing field for law-abiding businesses by supporting this bill.”
“This reform is pro-worker and pro-business,” said Sen. Kerry. “Today a tax loophole is being abused to deny workers basic protections and benefits. We shouldn’t reward those who game the system while hard-working Americans are denied their due protections and businesses that play fair are disadvantaged.”
“For too long, the misclassification of employees has put an unnecessary financial strain on American businesses and workers,” said Rep. McDermott. “Having a distinction between independent contractors and full-time employees is a good thing, but the current law is leading to significant abuse. Companies that misclassify workers have an unfair advantage over companies who play by the rules. Misclassification also leaves hard-working American families vulnerable to an uncertain economic future. This new bill makes important changes to the original by making sure there is a smooth transition to a clear obeying of the rules and it gives the IRS the tools it needs to even-handedly enforce those rules.%