Defense Contractors Seek Fiscal Cliff Relief, Budget-Busting Tax Breaks At Same Time

[Lakhota]

By Mark Gongloff and Ben Hallman

There's probably no group of companies more alarmed about going over the "fiscal cliff" of tax increases and spending cuts due to take effect next month than defense contractors. The cliff is heavily geared toward inflicting pain on the industry, with $500 billion in cuts to government defense spending over the next decade, a process called for extraordinarily boring reasons "sequestration."

In recent weeks, defense industry representatives have issued increasingly dire warnings about the dangers posed by the cuts.

"The dangers of sequestration are by now well understood, with more than 2 million jobs hanging in the balance and the Joint Chiefs warning of severe damage to America's security," David Hess, chairman of the Aerospace Industries Association, wrote to President Barack Obama earlier this week, in a letter signed by more than 130 aerospace and defense CEOs. "Accordingly, we are encouraged by the bipartisan commitment to stop sequestration and pursue a more responsible approach to our longer term fiscal challenges."

Less understood is the role the industry has played in pushing the country to the economic precipice. For years, these companies have lobbied for -- and won -- lucrative tax breaks that have cost the government billions of dollars. Even now, their lobbyists are pushing for an extension of a break that allows some companies to avoid paying taxes on some income earned overseas.

According to a study by the nonprofit group Citizens for Tax Justice, aerospace and defense firms paid an effective tax rate of 17 percent from 2008 to 2010, much lower than the 35 percent corporate tax rate mandated by law and just under the 18.5 percent average effective rate paid by all industries.

Some of those companies, in fact, paid negative tax rates during that period, once you account for government tax breaks. One of those was aerospace giant Boeing, whose executive vice president Dennis Muilenburg signed the AIA's letter to Obama. Boeing's effective tax rate was -1.8 percent from 2008 to 2010, on $9.7 billion in profit, according to the Citizens for Tax Justice study. That cost the government more than $3 billion in tax revenue, had Boeing been taxed at the 35 percent rate.

More: Defense Contractors Seek Fiscal Cliff Relief, Budget-Busting Tax Breaks At Same Time

 

[Old Rocks]

President Eisenhower had it so right.

 

[Lakhota]

President Eisenhower had it so right.

He certainly did.

 

[Lakhota]

"In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists, and will persist."

Eisenhower's Military-Industry Complex Warning, 50 Years Later : NPR

 

[Mad Scientist]

Don't forget that it's a "Military Industrial Complex' that is controlled by a "Scientific, Technological Elite".

A lot of people don't know it or leave that part out intentionally.

 

[Lakhota]

The U.S. defense budget is nearing $1 trillion per year.

US Defense Spending for 2013 - Charts

 

[BreezeWood]

... and by the way much of the pentagon sequestration will occur in Red Republican States -

surly that can't be the reason Republicans are up in arms against - Cuts in Defense Spending ???

 

[Lakhota]

The Dirty Little Red State Secret: Welfare Disguised as Defense Spending

 

[Mad Scientist]

The U.S. defense budget is nearing $1 trillion per year.

US Defense Spending for 2013 - Charts

And that's only how much there is On Record!

 

[Lakhota]

The U.S. defense budget is nearing $1 trillion per year.

US Defense Spending for 2013 - Charts

And that's only how much there is On Record!

Correct.

Exposing the Black Budget

Black Budgets and Black Projects