Did Blackwater Evade Taxes?
The House committee on Oversight and Government Reform raises the issue of how Blackwater pays its employees. Currently, Blackwater is the only contractor in Iraq that pays its armed guards as private contractors, not as employees (with income tax and social security withholding).
There’s nothing wrong with this arrangement by itself, but one of the guards working for Blackwater seemed to think it was unfair. He questioned his status as an independent contractor, and the IRS agreed with him. Now the speculation is whether the ruling applies to all of Blackwater’s contractors in Iraq and Afgahnistan as well:
Since the hearing, I have learned that the IRS determined in March — six months prior to your testimony — that your classification of a security guard working in Afghanistan as an independent contractor was “without merit.” The IRS advised that “[y]ou are responsible for satisfying the employment tax reporting, filing, and payment obligations that result from this determination.” By its terms, the IRS ruling applied only to the individual security guard who protested his classification, but the IRS warned that its ruling “may be applicable to any other individuals engaged by the firm.” The logic of the ruling would appear to apply to your entire workforce in Iraq and Afghanistan.
There is also evidence that Blackwater has tried to conceal the IRS ruling and the evasion of taxes from Congress and law enforcement officials. The IRS determination was issued in response to an inquiry by an individual security guard who questioned his classification as an independent contractor. In June, Blackwater required this employee to sign a nondisclosure agreement before it agreed to pay the back pay and other compensation that he was owed. The terms of this agreement explicitly prohibited the guard from disclosing any information about Blackwater to “any politician” or “public official.” The agreement further provided: “THE UTMOST PROTECTION AND NONDISCLOSURE OF CONFIDENTIAL INFORMATION IS OF CRITICAL IMPORTANCE AND IS THE ESSENCE OF THIS AGREEMENT.”
That last bit about nondisclosure is pretty scary, eh? Good thing that the Committee accepts anonymous whistleblower tips.
It’s a fact that our society’s workforce is moving to a more independent, less hierarchical form. Contractors and subcontractors are more and more common while pensioned, insured, “job-secure” employees are fewer and far between. The jury is still out on whether this will benefit society as a whole — I can see sound arguments on both sides of that issue. But again, the question of the day is: do we want our military to be contracted and subcontracted and sub-sub-contracted out? Where does the buck stop when, say, a bunch of subcontracted mercenaries open fire on a crowd of civilizans?
Truman had the correct answer to that question. Too bad our current President likes to be the decider and the buck-passer at the same time. Too bad everyone in his administration is part of the same culture of irresponsibility. Too bad that private military contractors can drop the buck anywhere they like… at least, until we get some laws passed that bring some legal accountability somewhere in this process.
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October 23rd, 2007 at 1:43 pm
“It’s a fact that our society’s workforce is moving to a more independent, less hierarchical form.”
Well, to me, it isn’t any less hierchical, and we are not less dependant on the people around us. Independant contractors aren’t any less on a totem pole of power than they were when they were employees. It is just that the responsibilities that empolyers have towards employees are being constantly and ever-more-rapidly eroded, to the point where the whole liability of working is placed on the employee.
That is a great situation of corperations, because they have less and less risk in employing people. I don’t think the jury is out on that at all- it sucks for all of us that work. We are forced to take up more and more liability and risks while corperations take up all the rewards.
So when you ask “where does the buck stop when, say, a bunch of subcontracted mercenaries open fire on a crowd of civilizans,” I disagree that this is a problem with the presidency. The bucks and bullets will only be stopping Iraq, which was the plan all along; that is capitalism– taking the risks and giving them to the people while giving the rewards to capitalists. So while the bullets will stop in Bagdad, the bucks will be stopping at the corperations.
That process is why replacing the current buisness guy (whose badness is only so amplified because he has closer ties to the businesses profiting from a destabilized Iraq than other capitalists) with another buisness president (which is basically the only kind the the Democrats will run) isn’t going to solve anything; the only thing that is going to change anything is when the bullets start to follow those bucks back to the corperations.
October 25th, 2007 at 9:15 am
I don’t mean that we’re less dependent on our fellow human beings — we will always need each other. But, the relationships in the business world ARE changing. Contractors may still be on a “totem pole” of sorts, but it differs from the traditional “corporate ladder” that one traditionally climbs.
Contractors are good for corporations because they are less expensive to hire and fire. At the same time, contractors have an easier relationship with corporations because they have the initiative to leave, raise their rates, negotiate the working conditions, etc.
And yes, replacing the current businessman with another businessman isn’t going to solve the problem of businesses performing inappropriate roles for government. That’s why we need a president to put his or her foot down and keep the military a people’s institution, not a private playground.
I have great hope that the Democrats will run such a candidate for President.