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GOP: Overturn Bush Era Measure to Let Federal Contractors Cheat on Their Taxes

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While Senate Republicans block a vote on a bill that would put thousands of teachers, firefighters, and police back on the job via the usual filibuster the GOP has employed for the last three and a half years, the GOP does like one piece of legislation.

According to TMP, what the Republicans like is a measure that will enable federal contractors to cheat more easily on their taxes – which of course will cost the rest of us more in taxes over the long run.

It’s a measure that repeals a law meant to prevent government contractors from skimping on their taxes. The so-called “three percent withholding rule is a Bush-era law that once had bipartisan support but Republicans now overwhelmingly oppose. It requires the federal government to husband three percent of significant government contracts until the contractors demonstrate compliance with the tax code.

Altogether, the withholding requirement saves the government billions of dollars a year, so to pay for it, Republicans have paired it with a $30 billion rescission of unobligated funding for federal programs — meaning Democrats will oppose it overwhelmingly.
“It’s just disturbing,” said Chuck Marr, a tax expert at the liberal-leaning Center on Budget and Policy Priorities. “This is a provision in the law put in two years ago to crack down on government contractors that cheat on their taxes.”

He said the economic impact of repeal would be “trivial” and send a dangerous message to contractors.

“There have been documented investigations by the GAO that have shown significant tax cheating by government contractors,” Marr said. “It’s a signal that the government’s softening up on tax compliance.”

Indeed, in 2007, the Government Accountability Office found that just hover 63,000 defense and non-defense contractors owed the government nearly $8 billion. And the Joint Committee on Taxation determined it would cost the Treasury $11.2 billion over 10 years.

Obama included the measure in part to attract Republican support for the whole bill — now they’re using it as a political weapon against the rest of the package.

Have the GOP completely lost their minds over the last four years…or is their hatred of President Obama so extreme that they would wreck the country and cost everyone millions more in taxes just to get him out of office?


Written by Valerie Curl

October 22, 2011 at 9:11 AM

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