The Hostile Takeover of Tax Enforcement

In case you thought the hostile takeover of our government by Big Money interests ended with the 2006 election, think again [1]:

"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. 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."

"Reviewing" - such a harmless sounding euphemism. But it's probably not:

"Senior employees of L-3 Communications Holdings Inc. (LLL) - parent company to MPRI, a defense contractor that has been the focus of scrutiny - donated generously to Baucus' re-election effort in March, according to federal records compiled by the Center for Responsive Politics. Those donations, made between March 19 and March 31, came from 14 top employees of L-3 and totaled $12,750, the records show. Most contributions were for $1,000, including from Ralph D'Ambrosio, chief financial officer, Charles J. Schafer, president of the firm's products group, and Curtis Brunson, senior vice president. The donations came just days after a March Boston Globe report revealed that KBR pays thousands of its personnel through a Cayman Islands affiliate."

This issue is about as pure as it gets in terms of corruption. As Dow Jones notes, if these loopholes aren't closed, these defense companies will "escape paying the employer's share of Social Security and Medicare taxes" to the tune of almost $1 billion dollars over the next decade. Baucus - widely known as K Street's favorite Democrat [2] - is in a position to block, water down, or support the Kerry-Obama bill. What he decides to do will tell us just how much the culture of corruption still dominates Washington.