18 Feb 2010

A recent US government report criticizing large American defense contractors of avoiding taxes by moving operations offshore could have interesting implications for the relationship between the industry and the state, Jody Ray Bennett writes for ISN Security Watch.

By Jody Ray Bennett for ISN Security Watch

Nearly one year after the G20 announced a commitment to crackdown on the use of international tax havens, giant US defense contractors continue to enjoy lightly regulated offshore financial centers to avoid taxation and escape paying millions in employee benefits.

In a report released in late January by the Government Accountability Office (GAO), the independent watchdog organization that investigates how the federal government spends taxpayer dollars, research found several large defense contractors with registered offshore subsidiaries and other holdings.

The findings of the report are rather interesting: “Many of the top 29 U.S. publicly traded defense contractors – those with $1 billion or more in DOD contracts in fiscal year 2008 – have created offshore subsidiaries to facilitate global operations,” and since 2003, have “increased their use of these subsidiaries by 26 percent, maintaining at least 1,194 in 2008.”

The report analyzed the following 13 companies: Lockheed Martin Corporation, The Boeing Company, General Dynamics Corporation, L-3 Communications, KBR Inc, ITT Corporation, General Electric, Computer Sciences Corporation, Health Net Inc, Harris Corporation, Honeywell International Inc, DynCorp International Inc, Rockwell Collins Inc, Fluor Corporation, Combat Support Associates and AECOM Technology Corporation.

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Link:  http://www.isn.ethz.ch/isn/Current-Affairs/Security-Watch/Detail/?lng=en&id=112888