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Top U.S. Defense Contractors Move Offshore to Avoid Taxes

by March 6, 2008 blog

A “no bid contractor” usually refers to a private for-profit corporation that receives American tax payer monies in large amounts (billions of dollars) without having to competitively bid for the contract. One of the most famous “no bid contractors” is Halliburton. Since Bush and Cheney have been in the White House, Halliburton has received tens of billions of dollars of our money.

There’s four important things to remind ourselves about Halliburton…

  1. Dick Cheney served as its CEO right before becoming Bush’s VP,
  2. Halliburton has received numerous “no bid” contracts since Bush became the U.S. President,
  3. Halliburton made profits hand over fist in Iraq, and,
  4. Halliburton moved its corporate offices out of Texas and into the Middle Eastern country of Dubai so that Halliburton could avoid paying U.S. taxes.

In other words, Halliburton has had carte blanche access to our tax payer funds, has profited enormously by banking our tax payer monies, but then, Halliburton itself does all it can do to doing its part to support the government that feeds it.

Now, there’s even more to report

Another “no bid” defense contractor moved offshore to avoid U.S. laws and to avoid paying U.S. taxes. This one was also a part of the Halliburton/Dick Cheney gravy train. It has moved it’s payroll offices to the Cayman Islands in order to sidestep U.S. laws:

CAYMAN ISLANDS – Kellogg Brown & Root, the nation’s top Iraq war contractor and until last year a subsidiary of Halliburton Corp., has avoided paying hundreds of millions of dollars in federal Medicare and Social Security taxes by hiring workers through shell companies based in this tropical tax haven.

When Texas pipe-fitter Danny Langford applied for unemployment compensation after being let go by Service Employers International Inc., he was rejected, he was told, because he worked for a foreign company.

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.

How does this sit with you? Does it bother you? You know, things weren’t always this corrupt in the United States.

There are many aspects to this that bother me. I don’t like it that the large profitable corporations that spend our taxpayer money don’t have to competitively bid for those projects. I don’t like it that they use my tax money to fill their shareholder’s bank accounts but they don’t pay their fair share of taxes to our government.

I don’t especially don’t like it that companies like Halliburton and KBR have huge lobbying efforts in Washington DC and they expect great favors from our government, yet, they do little to nothing to help pay for our government.

KBR is now widely believed to be the largest private employer of foreigners in Iraq, and it hires twice as many workers through its Cayman Island subsidiaries as it does by direct hires. Service Employers International alone employs more than 20,000 truck drivers, electricians, accountants, and engineers, roughly half of whom are American, according to Browne, the KBR spokeswoman…

Last year a Senate subcommittee estimated that US corporations avoid paying $30 and $60 billion annually in income taxes by using offshore tax havens… (Top Iraq contractor skirts US taxes offshore, Boston Globe)

We should have laws and policies that say we will only give out contracts to those who competitively bid for them, to those who maintain their corporate offices in the United States, to those who pay their fair share of corporate and payroll taxes – and, to those companies that have an arm’s length relationship to the White House or members of Congress. Naturally, KBR and Halliburton would fail on all these counts.

By my way of thinking, these companies are leeches that are sucking us dry and may actually bring about the demise of our country. The practice could become an even more costly problem in the future, as an increasing number of American companies register subsidiaries overseas and bring American employees to work abroad while raking in tax payer revenues to run their companies.