February 12, 2004
Enid Doggett
(202) 639-6422
John Irvine
(202) 639-6405

AFGE Blasts Bush Administration For Awarding Government Contracts To Tax Cheats

(WASHINGTON, D.C.)—John Gage, National President of the American Federation of Government Employees (AFGE), issued the following statement in response to a General Accounting Office report showing that over 27,000 defense contractors are evading taxes.

“Over 10 percent of defense contractors refuse to pay back taxes that they owe to the federal government but continue to win new contracts. It is appalling that federal law allows government agencies to send new business to tax cheats while dedicated tax-paying civilian employees are being laid off. This is just another example of the Administration putting cronyism before common sense.

“Even more distasteful is the fact that most of these cases involve payroll taxes. Payroll taxes are funds collected by businesses from employee salaries to be handed over to the federal government. Businesses never actually own these funds. If contractors cannot be trusted to even act as a go-between, why would we trust them to be stand-up business partners?

“The Bush Administration is in the midst of an all-out attack on the good citizens who make up the civil service. Despite the Administration’s clamoring about saving taxpayer money, this shows that they don’t care whether they save the government any money or not.

“We should remember that these contractors are not only companies that manufacture weapons systems. Some of these firms hold contracts with the government to perform work that goes to the heart of governmental administration, including payroll and internal accounting functions. These are the same companies that would have us believe that they should be given a chance to profit from administering Social Security and collecting taxes for the IRS. Many of these companies won their contracts on the basis of political connections—the same political connections that enable them to continue as corporate outlaws. Many private contractors overcharge, outsource good jobs overseas, and now we find that they don’t pay the taxes that they owe.”

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