Revenue from Fair Share
Provision Will Pay for Tax Benefits for Military Personnel
Statement of US PIRG Staff Attorney
John Krieger
On June 17, the President signed the
Heroes Earnings Assistance and Relief Tax Act, which had passed the House of
Representatives and the Senate unanimously last month. The HEART ACT provides
permanent tax relief for military families and it is partially paid for by a
provision, championed by Senators Kerry and Obama, that closes the tax loophole
that has allowed private contractors, including Kellogg, Brown, and Root (KBR)
to avoid paying almost $100 million a year in payroll taxes for its U.S.
employees by setting up foreign subsidiaries.
“By reining in tax-dodging private contractors who use
gimmicks to avoid their basic responsibilities, this Congress chose good
governance and accountability over cronyism and favoritism. We applaud Congress
for having the good sense to pay for this reward for military families by
closing sham tax havens for private defense contractors.
This practice of using shell companies in the Caymans to
hide from basic federal responsibilities is so purely disgraceful that when the
public was informed, they were outraged. A coalition of consumer, labor, church
and taxpayer groups, including AARP and the American Federation of State and
Municipal Employees, actively supported this provision.
Americans
are working hard this summer and paying their fair share, and we expect federal
contractors that receive billions from the federal government will do the same.
We know full well, though, that some federal contractors will try anything to
avoid paying back into the system, and we have to be vigilant and anticipate the
next gimmick that they will use to avoid their responsibilities.”
