NPR: Democrats Want To Close KBR Tax Loophole

Democrats Want To Close KBR Tax Loophole

Several Democratic lawmakers have decided that it's time for KBR Inc., the large U.S. contractor that provides many services to the U.S. military in Iraq (and that until last year was a unit of Halliburton Co.) to pay up.

On March 6th, the Boston Globe reported that KBR "skirted federal requirements to pay payroll taxes for Medicare and Social Security by setting up front companies" in the Cayman Islands.

More than 21,000 people working for KBR in Iraq - including about 10,500 Americans - are listed as employees of two companies that exist in a computer file on the fourth floor of a building on a palm-studded boulevard here in the Caribbean. Neither company has an office or phone number in the Cayman Islands.
The Defense Department has known since at least 2004 that KBR was avoiding taxes by declaring its American workers as employees of Cayman Islands shell companies, and officials said the move allowed KBR to perform the work more cheaply, saving Defense dollars. But the use of the loophole results in a significantly greater loss of revenue to the government as a whole, particularly to the Social Security and Medicare trust funds.

So The Swamp political blog reports that this news has lead Sen. Barack Obama and Sen. John Kerry Thursday "to propose legislation that would prohibit companies like KBR from exploiting tax havens to avoid payroll taxes." Reps. Rahm Emanuel of Illinois and and Brad Ellsworth of Indiana are proposing the legislation, known as the Fair Share Act of 2008, in the House.

From the Democrats' press release on the proposed legislation:

"The reform will close the loophole that recently has allowed the defense contractor KBR Inc. to fleece the American taxpayer by almost $100 million a year. It was discovered that KBR has avoided paying its fair share of Social Security and Medicare taxes by creating shell companies in the Cayman Islands. The Fair Share Act of 2008 will end the practice of U.S. government contractors setting up sham companies in foreign jurisdictions to avoid payroll taxes."

4:00 PM ET | 03-13-2008 | permalink

Comments

"Can we clean up this mess? the loss of loved ones a perverse request. They continue voicing rhetoric, these derelicts that profit win or lose.

Is it time to make a change? Are we closer than before, can we help them break away? Are we profiting from war?"

The idea, that anyone, should profit off of war, is repulsive. The fact that any nation, would take up arms, for any cause, is lamentable. War serves no one, neither the victor nor vanquished, on in the case of modern warfare, the stalemated. It serves only one purpose to make money for those who profit, when or lose.

Sent by Jody Sol | 5:44 PM ET | 03-13-2008

IS ANY ONE TRACKING A STORY ABOUT OUR GOVERMENT SENDING $34 MILLION JUST TO SEND US NOTICE WE ARE SCHEDULED TO RECIEVE A REBATE HOW WAS THE CHILDREN HEALTH PROGRAM BUSH VETO COSTS ?

Sent by ANGE PUIG PH.D LICENSED PSYCHOLOGIST N.J. | 6:01 PM ET | 03-13-2008

First point of interest is that this interest in KBR comes after spun-off from Halliburton.

Maybe Kerry has stock in H.

Is it not time for the entire Congress and executive branch to build and pass an "equitable for all" tax code.

Maybe they know more than us.....as an example; that the Federal government cannot at this time afford one.

I do not understand how the USA can spend several hundred billion dollars a year for wars and then build even more dept with unallocated money for war beside.

Does rebuilding the American infrastructure sound at least as attractive as rebuilding Iraq's?

No body seems to take that idea very far in political conversation. Let us hear the President, the candidates and the congressional folks start talking that up.

Makes me wonder what the politicos will be saying when gas for the US auto fleet hit four or five dollars per gallon.

Next few years ought to be interesting. We probably won't like it but none the less interesting.

Sent by Dave Rosen | 6:49 PM ET | 03-13-2008

Here is a very interesting article on the subject from the Chicago Tribune. They also had one of the reporters discuss this article on C-SPAN the Saturday right after the article ran.

It never ceases to amaze me at the lengths people will go to make a buck.

http://www.chicagotribune.com/news/chi-kbr-war-profiteers-feb21,0,3494273.story

Sent by Jan Illinois | 7:11 AM ET | 03-14-2008

Great article!

I was in Baghdad in '03. We were eating MREs three times a day during the summer while the Bremer's Green Zone Palace ate from a sumptuous buffet. We didn't get body armor (with actual armor plates) until we took our first two wounded and we had to improvise armor for our HMMWVs with plywood.

Reminds me of the Civil War, where Lincoln's first Sec of War was transferred to Ambassador to Russia after his contracts produced defective muskets, shoddy boots and backpacks that fell apart the first time it rained on them; all while the assistant Secretary was taking kickbacks.

At least Lincoln did something about it. The crew we have now are stuck to this mess in fine historical fashion.

Sent by Chester | 11:10 AM ET | 03-14-2008

Barack Obama, revealing earmarks, releasing his tax return, pushing Congressional ethics reform and common-sense corporate tax reform, not taking money from Washington lobbyists.

Hillary Clinton, refusing to reveal earmarks (she's had twice to three times the earmarks), refusing to release tax returns (previous hidden tax reforms revealed she had made 10,000% on shifty, cattle futures investments that were the subject of later investigations), not pushing Congressional ethics reform, taking money for defense and health industry lobbyists.

Who do you want for president?

(Note: Hillary shrills will immediately begin bashing Obama's links to Rezko - but won't mention that Rezko has contributed to her campaign. They will also predictably refer to Barack Hussein Obama to try to fearmonger and associate him with Saddam Hussein and Islam. Because that's all they can do: attack, attack, attack!)

Sent by Paul Chen | 5:04 PM ET | 03-14-2008

I wonder when truly representative individuals will run our government. However, I'm taking notes from Gandhi and understanding that I don't need a position of power to wield power, because power is truly influence, I'm blazing a path to true freedom. I'm scaring many and inspiring many more. I hope you reach inside of yourselves and do what's right, not just what appears to be right. Also try to help others think for themselves. Independence is what I seek and as long as there's a bureaucratic system in place, I cannot even call myself independent if all those around me are not either.

Peace!

Sent by Andy Nevada | 5:56 PM ET | 03-14-2008

This is a nice start. Going after the egregious and widespread abuse of the Foreign Tax Credit would also help bring an amazing amount of tax revenue back into this country and stop subsidizing corrupt foreign governments.

Sent by Todd Whitesel | 4:44 AM ET | 03-15-2008

Cheney will have a large chunk of change in that blind trust when his term is over.

Sent by Kirt M.DeVecht | 7:33 AM ET | 03-17-2008

A comment for Barack Obama--#1.) You voted to support George Bush's energy policy in 2005. 2.) Your wife is proud of her country for the first time in her life. 3.) You do not think there is anything wrong with your pastor as a human being who stood up in a church and urged people to "God damn America." I want you to know that I, a liberal American who always votes, find these facts more than enough reason to question whether you should be the president of our country.

Sent by Narees Breach | 5:14 PM ET | 03-19-2008

Narees needs to listen to the actual Rev Wright oration. I think he'd agree with the sentiment -- basically that America has damned herself with her behavior. Don't remember the exact quote but something to the effect that true patriotism requires being critical of the loved country's behavior.
And the corporations should be paying for their use of our common resources, like the courts, and law enforcement (including military protection of resources, ie middle eastern oil).

Sent by Jwinn | 10:05 AM ET | 04-18-2008

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