Excess-profits tax on defense contractors during wartime is long overdue

[xchrom]

http://www.washingtonpost.com/world/national-security/excess-profits-tax-on-defense-contractors-during-wartime-is-long-overdue/2012/12/31/c8f03416-513f-11e2-950a-7863a013264b_story.html

No one can safely predict what will happen in 2013, but here are a few things I would like to see occur when it comes to national security.


My most radical idea — and it should have been done 10 years ago — is for an excess-profits tax on defense contractors while we have troops fighting overseas. As I have often noted, Afghanistan and Iraq are the first U.S. wars in which taxes were not raised to pay for the fighting. Instead, the cost has been put on a credit card.

In World Wars I and II and the Korean War, Congress approved new taxes, including one directed at defense contractors. In introducing his request in 1940 for a “steeply graduated excess-profits tax,” President Franklin D. Roosevelt said the government should make sure that “a few do not gain from the sacrifices of many.”

Since 2002, profits of the five largest U.S.-based defense contractors have “increased by a whopping 450 percent,” said Lawrence J. Korb, senior fellow at the Center for American Progress.

[OneTenthofOnePercent]

1. Did you know that civillian contractors working overseas have personal exemptions?

Civilian contractor employees (Blackwater/XE/Halliburton/Lockheed/Northrop/Dyncorp/Mantech/etc...) have income tax exemptions of like $91,000. Spend 11+ months in a rolling calender year overseas (making an already large paycheck) and over $90k of it is tax free. So if you make $140,000 paycheck, you only get taxed on the last $50k in the $50k tax bracket.

Crazy.

[malaise]

2. That's why they need wars

everywhere

[Last Stand]

3. sssshhhhh!

Can't talk about this stuff when we discuss why the budget's a mess. Unbid contracts, undetailed budgets, missing billions... nothing to see here....

[peacebird]

4. Agreed.

[OmahaBlueDog]

5. Bigger picture -- we need a complete overhaul of Pentagon procurement & contracting

The Boeing v. Northrup Grumman fuel tanker debacle clearly shows this. The bid process needs to clearly be re-examined, and congress critters with vested interests in their district in obtaining or keeping work in their district need to be excluded from the process.

I'm not against a “steeply graduated excess-profits tax.” I'd start, however, by vastly strengthening the audit and oversight arms of both the CBO and the Pentagon. There's lots of waste and fraud in defense contracting, and it's long-past time to go after it.

Bush/Cheney (or the Congress in 2002) should have enacted a "war tax." Such taxes serve many purposes. They pay for the conflict (obviously); they make everyone (in a small way) share the sacrifice being borne by our troops; and the tax gives everyone incentive to see that the war is prosecuted quickly.

[Pakid]

6. The best solution when it comes to defense contractors

is the one that FDR used during WW2 What he did was called a cost plus profit plan. The contractors got back what it cost them to build the product plus a fixed percentage profit that way they could not charge what ever they wanted. That should still be the rule today after all it is our money that they are getting and there should be limits to how much of it they get!!!!

[indepat]

7. The few gaining from the sacrifices of many is now the standard operating

procedure: it is what privatizing, outsourcing, charter schools, and the like are all about.

[xchrom]

8. It's the New Gold Mine. And it's ever ReNewing. Nt

[Festivito]

9. Clinton banned war profiteering, Bush jr. unbanned it in his first year.

And, I'm so glad GHWB lasted long enough to have his estate taxed.