Halliburton: War profiteering by tax dodge

[Macs.]

War profiteering by tax dodge

FOR YEARS, companies more interested in profits than patriotism have registered overseas or used foreign subsidiaries to avoid US taxes. Now a major Pentagon contractor once managed by Vice President **** Cheney is using Cayman Islands shell companies to help it and its workers escape US payroll taxes.

KBR, the largest private contractor for the Pentagon in Iraq, has two shell companies in the Caymans, that, for bookkeeping purposes, employ about 10,500 Americans in Iraq. Because the companies are offshore, neither KBR nor the workers must pay Social Security and Medicare taxes, allowing the company and its workers to avoid paying about $100 million a year, according to Globe reporter Farah Stockman.

The revelation should give impetus to bills, including one sponsored by Senator John F. Kerry, that would close loopholes for companies registering overseas. "Failing to contribute to Social Security and Medicare thousands of times over isn't shielding the taxpayers they claim to protect," Kerry said. "It's costing our citizens in the name of short-term corporate greed."
The principal losers in KBR's tax dodge are US taxpayers. Even though KBR and the workers do not pay Medicare taxes, the employees still will be eligible for benefits eventually, hastening the predicted depletion of the Medicare fund. The workers themselves stand to lose out if they are laid off. Through its shell companies, KBR also avoids unemployment taxes in Texas, where it is registered, and its employees get no unemployment benefits.

When KBR set up the second of its two shells in the Caymans, it was still owned by Halliburton. Halliburton's chief executive then was Cheney. His office referred inquiries into the matter to Cheney's personal lawyer, who has not replied to inquiries from the Globe.

A KBR spokeswoman said the company does not save money by avoiding the taxes, because its contracts call for the Pentagon to reimburse it for all its employee costs. But evading the payroll taxes gives KBR a competitive edge when it bids against other contractors in Iraq. KBR cannot claim that everyone is doing it. Stockman could identify just one other major contractor among the 10 leading ones in Iraq that has set up a foreign subsidiary in this way.


The Pentagon has known of the KBR loophole, but has not complained about it, on the grounds that the savings are passed on to the military. This is a short-sighted view. The Pentagon should not be encouraging contractors to work tax angles that damage the fiscal well-being of the country, even if they provide short-term savings to the military.
Ultimately, though, it is up to Congress to protect the country from these Benedict Arnold CEOs, in Kerry's phrase, by ending all overseas tax havens.http://cache.boston.com/bonzai-fba/File-Based_Image_Resource/dingbat_story_end_icon.gif
http://www.boston.com/bostonglobe/editorial_opinion/editorials/articles/2008/03/07/war_profiteering_by_tax_dodge/

[Chulo]

on a side note. if the government wishes to tax the crap out of companies and put out more than an equal share (comparative to the economy and nation) then is it a surprise that companies would make an effort to hide the assets?( while hiding assets are not right, i think the problem is on both sides) with a Democrat we will be seeing more large companies seriously consider moving overseas because of all the taxing for social handouts

[Invisigoth]

Because they didn't make enough profit in Iraq from the same government and country that they are damaging through their tax evasion? I think the American government that will come into power following the Bush administration needs to take a really hard look at the outsourcing that has been going on and ask the crucial question, 'is this really saving us money'? I'd argue it isn't.

[packetloss]

Because they didn't make enough profit in Iraq from the same government and country that they are damaging through their tax evasion? I think the American government that will come into power following the Bush administration needs to take a really hard look at the outsourcing that has been going on and ask the crucial question, 'is this really saving us money'? I'd argue it isn't.

There's an inherent problem though - You cant skip outsourcing in a non-conscription army. Will you join to peel potatoes?

There should be some more government spending ground rules - ie. Taxmoney spent on contracting should have to be signed over to a domestic company/bank and be properly taxed/vetted like everyone else.

[Ought Six]

"There is nothing sinister in so arranging one's affairs as to keep taxes as low as possible."

"Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one's taxes...."

-- Judge Learned Hand --

[deagle]

its no wonder our economy is wack'd...CEO's getting severance packages (instead of penalties) for losing their companies money. not saying they shouldn't be compensated, but they should be more accordingly, or at least a pay cut (if they got bonuses when business was good, they should be getting bonuses now). they should pay their employees who break their backs to earn a decent living, not CEO's who are getting basically rewarded.

sort of like our govt....the select few who are lining their pockets, but are giving nothing back (directly or indirectly) to the ppl.

heard haliburton moving overseas, to bypass taxes...thats basically stealing from the ppl by depriving them of jobs, taxes, etc...

[orionhawk]

heard haliburton moving overseas, to bypass taxes...thats basically stealing from the ppl by depriving them of jobs, taxes, etc...
well, that's a new one on me... I didn't realize "the People" had some kind of special right to money earned by someone else.


btw, the article refers to KBR, not Halliburton. the two have been separated for several years now.

[Parx400]

Anything someone does to not pay taxes is fine by me. We are way over taxed and the government wastes it on pork spending. People would not try and cheat on taxes if we felt the money was managed properly. I would write off my morning dump if i could get away with it.

[Createdeemcee]

( while hiding assets are not right, i think the problem is on both sides) with a Democrat we will be seeing more large companies seriously consider moving overseas because of all the taxing for social handouts.

Thats just it Large companys will be hit harder in the pocket for taking jobs away over seas. So that should minimize Larger comapies leaving, And keep more jobs here.

[Chulo]

Thats just it Large companys will be hit harder in the pocket for taking jobs away over seas. So that should minimize Larger comapies leaving, And keep more jobs here.
can you explain that?

Thats just it Large companys will be hit harder in the pocket for taking jobs away over seas. Meaning it wont be efficient for big companies to move somewhere else?

[Firetxmi]

well, that's a new one on me... I didn't realize "the People" had some kind of special right to money earned by someone else.


btw, the article refers to KBR, not Halliburton. the two have been separated for several years now.

You willing to take a pay cut if everyone takes the attitude that it is their duty to find ways to pay the government next to nothing in taxes?

[Parx400]

Thats just it Large companys will be hit harder in the pocket for taking jobs away over seas. So that should minimize Larger comapies leaving, And keep more jobs here.

Wrong. With less choice we will pay more for those products. Amierica is not the only consumer in the world anymore. Buick sells more cars in China than they do in the US. If you want to keep the jobs here, break the unions, and lower corp tax to around 25%. You can not force corporations to stay here. They wil lalways find a way around laws put in place to hurt them. Our Auto Industry sucks Because the UAW holds them hostage. NOtice how Honda, Toyota, BMW, MB all have factories here and are going to build more. What to do they have in common? NONUNION LABOR. They also have very automated factories that we cant build, why, because the unions will not let them. The ports in the US are the same. Out dated slow machines. If you try to update them you will see a bunch of fat over paid guys picketing all day hurting the rest of our economy.

[Firetxmi]

A gentlemen I know in business once explained it to me like this also:

"Why would I want to build a factory here where I am going to have to pay for health insurance for my employees when I can go to another nation where the country foots the bill for health care. It saves me a ton of money!"

Sad but true.

[IMTT]

"I can't believe there is gambling going on in this establishment Rick."

[NavyTimes]

How you guys can accept the flow of your tax money going into companies like Haliburton is beyond me.

Implying that your economy is in problems because workers use their right to organize themselves is just weird from my standpoint. Why in the world should each individual want to bargain with a huge corporation by himself?

[Ought Six]

Ft:
"You willing to take a pay cut if everyone takes the attitude that it is their duty to find ways to pay the government next to nothing in taxes?"I am willing to live in a place where people obey the tax laws as minimally as humanly possible. But then, I already do; no pay cut needed. This is correct in both the legal and moral sense. If this is a problem, it is not with the taxpayers (individual or corporate). It is a problem with poorly-written tax laws, and that is the duty of Congress to fix.


=======================================================================

NT:
"How you guys can accept the flow of your tax money going into companies like Haliburton is beyond me."First, you should not take all the press hysteria about Halliburton as gospel. Second, for massive undertakings there are a small handful of companies big enough and qualified to take on the job. Haliburton and KBR are among those few. Third, if you think you can do it better, you are free to start your own company and compete.

[9mmRifle]

Third, if you think you can do it better, you are free to start your own company and compete.

I would argue the US may have many companies that could do a much better job, the reason why they will lose out to Halliburton is because of unjust favoritism. Did you know the VP's share options rose something like 3,200 % - Three Thousand Percent ! The politicians talk about working hard, taxes, contributing your bit yet you'll find plenty of Republican and Democrat overseas tax havens in the Caribbean for their own personal money laundering. I'm not really surprised anymore by the reports about how expensive the war has been.

[Calanen]

I would argue the US may have many companies that could do a much better job, the reason why they will lose out to Halliburton is because of unjust favoritism. Did you know the VP's share options rose something like 3,200 % - Three Thousand Percent ! The politicians talk about working hard, taxes, contributing your bit yet you'll find plenty of Republican and Democrat overseas tax havens in the Caribbean for their own personal money laundering. I'm not really surprised anymore by the reports about how expensive the war has been.

**** Cheney donated his stock options to an independent trust, two days before he became Vice President. Any profits from his options, are used by the trust to make donations to 3 charities. Dont see that on CNN much.

http://www.factcheck.org/kerry_ad_falsely_accuses_cheney_on_halliburton.html

Here's a copy of the Gift Administration Agreement:

http://www.factcheck.org/UploadedFiles/Cheney_Gift_Trust_Agreement.pdf

[hank]

The problem with this stuff relating to Halliburton and its subs to me is very different from public companies that don't base their existence on government contracts. Exxon, as a publicly held company, can structure itself any way it wants to avoid as much tax as it can - as Learned Hand so aptly said.

But HB and its subs are different than Exxon. HB is largely paid with tax dollars through its govt contracts. Its beyond dispute that Congress has the right to dictate the practices/structure of companies it allows to contract with the govt. Congress could eliminate HB's ability to do stuff off shore but they don't. Why?

hank

[bk1133]

I have Haliburton and KBR stocks, mine increased as well. Although I don't have nearly the amount that the VP does. You are free to invest or start your own firm. Ask Kerry why Heinz is not registered in America. Congress will always punish successfull companies. And I don't believe they are hiding it, they just moved to a place thats more advantagious. The same reason Honda et al. moved to the states.

[deagle]

they should be held accountable , and punished for ripping the American ppl off.

[Ought Six]

d:
"they should be held accountable , and punished for ripping the American ppl off."Do a websearch and look at articles detailing problems with Halliburton or KBR. In almost every case you will find that the problems were revealed by government auditors or investigators, leading to the company being fined and having to make good on overcharges. What you are calling for is already done. As for legal tax avoidance, it is legal.