Homebuilders and federal tax

Bob,

I work for a large construction firm, but I can see where a home builder might have some concern about the FairTax. At one level, the home builder thinks that he is enjoying an exemption from payroll taxes, because most of the labor involved in building a home is contract labor.

It's a misconception on his part to think that these "contract" employees don't file quarterly estimated tax reports and ultimately pay into the income tax and social security funds just like a corporation would do for a full time non-contract employee. So in this sense, the tax cost is still embedded in his cost, with all the
same profit and overhead markups that are passed on at different tiers, just like a large construction company. It's just not quite as transparent.

Another interesting note is that one of the founders of the FairTax movement owns a large construction firm in Houston that has been around for quite some time and has been very successful. It's not likely that someone will be able to furnish a convincing argument that the same business principals used in a large successful
construction firm wouldn't apply at the smaller scale of a home builder.

Robert Nathan