Craigslist's Next Problem

http://www.futureofcapitalism.com/2010/09/craigslists-next-problem

The use of the internet classified community Craigslist for sex ads has been the subject of a Congressional hearing, scrutiny by 17 state attorneys general, and extensive press coverage, including an article on the front of the business section of the New York Times. The objection seemed to be, in part, that the Web site was being used to facilitate illegal activities.

But paid sex isn't the only illegal activity that Craigslist ads facilitate. Search "off the books" in Craigslist and there are plenty of advertisements from people seeking employers who will help them avoid payroll taxes. Doing so is just as illegal (if not as sensational as a television news story) as paying for sex. Example: "I prefer to work off the books." Example: "My rate is $12-$15/hr off the books." Example: "Salary: $14+/an hour, on or off the books. Off the books - CASH ONLY!" Example: "must be off the books!" (Craigslist deletes the ads after a certain period of time, so these links will eventually go dead, though the company says it will respond to valid subpoenas for old ads.)

The think tankers in Washington are already coalescing around the consensus that the way to solve the entitlement fiscal problem in America is to raise taxes on "the rich" and cut their benefits. But one reason the system is out of balance is that there are plenty of workers and employers out there who aren't paying Medicare or Social Security taxes at all. Some of them may be illegal immigrants, so they won't end up collect the benefits (unless there is an amnesty or a path to legalization). But to those of us who pay employees on the books and who pay taxes, it's maddening to see, and especially maddening from a Web site, Craigslist, that touts its "public service mission, and non-corporate culture." (So "non-corporate" that it is a quarter owned by Ebay, but don't get me started.) What's the "public service" in facilitating employment relationships in which an employee doesn't qualify for unemployment if he or she gets fired, doesn't collect as much Social Security if he or she retires, and, if he or she qualifies for Medicare, does so on the basis of freeloading on premiums paid in by others who did pay the tax?

The argument that Web sites tend to make in these situations is that they are no more legally or morally culpable than, say, the phone company would be if someone uses a phone line to arrange an off-the-books employment situation. Or the bus company if someone rides a bus to their off-the-books job. Tax evasion and illegal immigration are national issues, just as sex trafficking is, so it's probably unfair to single out Craigslist for blame. They also tend to say they get millions of ads and don't have time to individually review each one; if someone reports a problem, they will take it down. I've sent a query to the Craiglist press operation and will update this post if and when they respond. I can report from personal experience using the New York Craigslist in trying to hire a legal, on-the-books household employee a while back that about 90% of the people I called, even if they didn't say so in the ads they posted, refused to work "on the books." Whether it was a question of immigration status or just not wanting the taxes taken out, I didn't get into. But there aren't too many highly respected "public service mission" businesses out there where 90% of the users in a certain category aren't planning to obey the law.

by Ira Stoll  |  Sep 16, 2010 at 11:20 pm Related Topics:  Health Care, Immigration, Taxes receive the latest by email: subscribe to the free futureofcapitalism.com mailing list