Attention Home Builders and Contractors, Sam Rohrer Wants To Tax Your Labor Costs

"Mr. CUTLER. Oh, I am sorry, Mr. Speaker. Prebuilt modular homes are included on page 45 of the bill. Is that a true mobile home or trailer, or is that a modular home, whether it come in two, three, four pieces or however many pieces might in fact be shipped over the road, or is it both of them?
Mr. ROHRER. That is likely both.
Mr. CUTLER. Likely both, okay.
Mr. ROHRER. In order to be fair, yes.
Mr. CUTLER. With regards to those homes, my understanding of why those homes are so attractive is the fact that they tend to be less expensive to build than a traditional home, so for an apples-to-apples comparison, because I think that is what you are going after here tonight, a modular home would then be taxed, if I remember correctly, at 60 percent of the seller's cost or 100 percent of the retailer's cost, depending on when it is actually taxed. What taxes would be levied on new home construction, or is that, in fact, not taxed?
Mr. ROHRER. Mr. Speaker, a person who buys or builds a home today, builds a home, if it is new, pay a sales tax right now on all the material. All right? So they are already paying sales tax on that portion. Under this, they would pay sales tax on the labor part as well.
Mr. CUTLER. For the new home?
Mr. ROHRER. For a new home. For an existing home, it would not.
Mr. CUTLER. So in that case, both new homes and preconstructed homes would be taxed both on their materials as well as the value added by the service provided by the contractors. Is that correct?
Mr. ROHRER. They are already paying 6 percent on all of the materials.
Mr. CUTLER. Right. But we would now include the services that are associated with that?
Mr. ROHRER. Services would be included as well.
Mr. CUTLER. Okay. Thank you."

House Journal January 28, 2008