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RIPIRG helped to win a major victory for the public over tax-dodging private contractors this month. Several major federal contractors, including Kellogg, Brown, and Root, a Haliburton spin-off, have used taxpayer funds to set up sham companies in tax havens like the Cayman Islands in order to avoid paying their most basic federal responsibilities. In response, we worked in a coalition of consumer, labor, church, and taxpayer groups to urge members of Congress to close this outrageous tax loophole and to ensure that contractors that receive billions in tax dollars pay their fair share of taxes and employee withholdings.
Both the House and Senate responded by including a provision closing the loophole to a bill extending tax relief for military personnel and veterans. The HEART Act rewards members of the military for their service and pays for it by stopping tax gimmicks from some of the government’s largest private contractors. The bill passed 403-0 in the House, and was approved by unanimous consent in the Senate. Some of the federal government’s largest private contractors, including KBR, the largest defense contractor in Iraq, will have 30 days to reform their corporate structures, reclassify their employees, and start paying their fair share of Medicare, Social Security, and payroll taxes.
