Team Infidel
Forum Spin Doctor
Wall Street Journal (wsj.com)
May 13, 2008 By Martin Vaughan, Dow Jones Newswires
WASHINGTON-- Pentagon contractors under scrutiny for setting up shell corporations in offshore tax havens are looking to the Senate as a line of defense against legislation that would curb such transactions.
The House passed legislation in April that would treat the offshore companies as U.S. employers - effectively subjecting the contractors to Internal Revenue Service audit and enforcement if they continued to skirt payroll taxes.
Now, Sen. John Kerry, D-Mass, wants to attach language cracking down on the practice, which he authored with Democratic presidential hopeful Sen. Barack Obama, D-Ill., in the next tax bill that moves through the Senate.
But leading Senate tax-writers are still considering whether to back the Kerry bill.
Sen. Max Baucus, D-Mont., who chairs the Senate Finance Committee, is reviewing the bill. "It's likely an issue that Finance will pursue in some form," his spokeswoman said.
Baucus's Republican counterpart on the Finance panel, Sen. Charles Grassley, R-Iowa, also has yet to take a position. A spokeswoman said Grassley is "looking at the bill," and noted that he has a record of legislating to combat offshore tax abuses.
The Kerry-Obama bill seeks to prevent government contractors from avoiding paying employer taxes on wages by setting up shell corporations in Bermuda or in the Cayman Islands. A series of articles by the Boston Globe this year revealed that leading Iraq contractors KBR Inc., formerly known as Kellogg Brown & Root, and MPRI have hired personnel through offshore subsidiaries.
By doing so, Democratic lawmakers charge, the firms escape paying the employer's share of Social Security and Medicare taxes. Congressional tax estimators say the offshore structures will cost the government $846 million over the next 10 years in lost payroll taxes.
May 13, 2008 By Martin Vaughan, Dow Jones Newswires
WASHINGTON-- Pentagon contractors under scrutiny for setting up shell corporations in offshore tax havens are looking to the Senate as a line of defense against legislation that would curb such transactions.
The House passed legislation in April that would treat the offshore companies as U.S. employers - effectively subjecting the contractors to Internal Revenue Service audit and enforcement if they continued to skirt payroll taxes.
Now, Sen. John Kerry, D-Mass, wants to attach language cracking down on the practice, which he authored with Democratic presidential hopeful Sen. Barack Obama, D-Ill., in the next tax bill that moves through the Senate.
But leading Senate tax-writers are still considering whether to back the Kerry bill.
Sen. Max Baucus, D-Mont., who chairs the Senate Finance Committee, is reviewing the bill. "It's likely an issue that Finance will pursue in some form," his spokeswoman said.
Baucus's Republican counterpart on the Finance panel, Sen. Charles Grassley, R-Iowa, also has yet to take a position. A spokeswoman said Grassley is "looking at the bill," and noted that he has a record of legislating to combat offshore tax abuses.
The Kerry-Obama bill seeks to prevent government contractors from avoiding paying employer taxes on wages by setting up shell corporations in Bermuda or in the Cayman Islands. A series of articles by the Boston Globe this year revealed that leading Iraq contractors KBR Inc., formerly known as Kellogg Brown & Root, and MPRI have hired personnel through offshore subsidiaries.
By doing so, Democratic lawmakers charge, the firms escape paying the employer's share of Social Security and Medicare taxes. Congressional tax estimators say the offshore structures will cost the government $846 million over the next 10 years in lost payroll taxes.