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

[unhappycamper]

http://www.huffingtonpost.com/2012/12/06/defense-contractors-fiscal-cliff_n_2253685.html?utm_hp_ref=business




Defense Contractors Seek Fiscal Cliff Relief, Budget-Busting Tax Breaks At Same Time
Mark Gongloff
Ben Hallman
Posted: 12/06/2012 7:17 pm EST | Updated: 12/07/2012 1:56 pm EST

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."

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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.