According to a report from the Government Accountability Office (GAO) thousands of companies, including more than 3,700 government contractors and nonprofit organizations, received more than $24 billion in stimulus money even though they owed more than $757 million in back taxes.
Tax delinquents, in this case corporations that had taxes due to the federal government as of December 2009, accounted for nearly 6 percent of the stimulus money handed out in President Obama’s American Recovery and Reinvestment Act signed into law in February 2009.
One example cited in the report was an engineering firm that received a $100,000 stimulus act contract at the time it owed $6 million in back taxes. Another example was a social services nonprofit that received more than $1 million in stimulus funds while owing taxes of $2 million. How does such a thing happen? While the average American was paying their taxes and struggling to make ends meet, the government was handing out cash to scofflaws.
The GAO has reported 15 specific cases from the report to the IRS for investigation. Want to bet that those firms were getting some sort of pay back for political favors in the 2008 election? You can be sure any of those being remunerated for their support of the President or Democrats will have their investigations swept under the rug; it’s a whole new level of corruption.
This week the Senate Homeland Security and Governmental Affairs subcommittee will hold a hearing on the GAO report, though you can bet the goal will be to find some low-level official to carry the blame and no one in the administration or in congress will be taken to task, or, better yet, charged with a crime.
I was stunned to learn that federal law does not prohibit tax delinquents from getting government contracts or grants. Huh? Does that mean it’s common practice to reward corporations that don’t pay their taxes while you or I would be nailed to a cross? How, in the day and age of $1000 toilet seats and $200 bolts, would we allow a government contractor to benefit from taxpayer dollars while not paying their taxes? Exactly what do we get for the $174,000 in salary we pay each member of the House and Senate?
Hold on to your hats! Senator Carl Levin, Democrat and chairman of the investigations subcommittee holding the hearing, said “It has been known for years that a few federal contractors and grantees do not pay their taxes.” Well, for the love of God, why the hell haven’t they fixed this? And I don’t know about Mr. Levin’s counting skills, but I do know that 3,700 isn’t “a few.”
Levin said a program to recover money from tax delinquents has been strengthened, and “the executive branch has made it clear” that nonpayment of tax can be grounds for denying a specific contract or barring a contractor from bidding on any contract. But apparently it isn’t reason not to throw $24 billion at them as part of a corrupt stimulus bill.
Senator Tom Coburn, ranking Republican on the committee said, “It is a matter of basic fairness that those who take government money should be required to pay their taxes like everyone else. That such a huge amount of the stimulus money went to known tax cheats should be a wake-up call for Congress.”
The report identified that about 35 percent of the unpaid taxes were for debts incurred before 2003 and that more than half of the apparent violations, $417 million, were from unpaid corporate taxes. So apparently even after 6 years had lapsed, rather than spending a few dollars to collect the unpaid corporate taxes we gave them more. A quarter of outstanding taxes, $207 million, were from unpaid payroll taxes; that’s Social Security and Medicare. No wonder we’re going broke.
The pièce de résistance is a security firm that owed $9 million, primarily in unpaid payroll taxes from the mid-2000s, which received more than $100,000 in stimulus money, had a history of being uncooperative, missing deadlines and repeatedly filing appeals, according to the records. While the folks in Washington are complaining about tax breaks for oil companies, apparently the practice of paying other companies to dodge their taxes is much less objectionable. Doesn’t this make you feel proud of your government; looks a lot more like Pakistan all the time. What right do we have to encourage other countries to clean up their act when our government treats taxpayer’s money like a political slush fund?