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Senate Passes Kerry-Obama Legislation to Close KBR Tax Loophole, Provide Tax Relief for Troops

Press Release

Location: Washington, DC

Senate Passes Kerry-Obama Legislation to Close KBR Tax Loophole, Provide Tax Relief for Troops

- Senators John Kerry and Barack Obama today announced that the Senate passed the Heroes Earnings Assistance and Relief Tax Act of 2008 (The "HEART Act"). The Act would provide tax relief to the men and women in our nation's armed services and others volunteering service on behalf of the United States, including Peace Corps volunteers and AmeriCorps volunteers - and is paid for by the Kerry-Obama tax reform that closed the tax loophole that allowed defense contractor KBR to avoid paying its fair share of taxes. The Act passed the House yesterday and now goes to the President for his signature.

Kerry and Obama were instrumental in ensuring that the funds that will be used to pay for these benefits came from defense contractors that were not paying their fair share of taxes. In March, they introduced the Fair Share Act of 2008 to close the loophole that had allowed KBR to fleece the American taxpayer by almost $100 million a year. It was discovered that KBR and another defense contractor have avoided paying their fair share of Social Security and Medicare taxes by creating shell companies in the Cayman Islands. The Fair Share Act of 2008 will end the practice of U.S. government contractors setting up sham companies in foreign jurisdictions to avoid payroll taxes.

"Now thousands of military families in Massachusetts will receive the benefits they deserve and big companies will pay their fair share of taxes rather than leaving hard working Americans with the bill," said Senator Kerry.

"This important bill will provide much needed tax relief to our brave service members and hold American companies accountable for paying taxes and guaranteeing that employees receive the benefits they are entitled to through their employment," said Senator Obama. "For the sake of transparency and fairness in our tax system, we cannot allow Federal contractors to set up shell corporations in tax shelters and shirk their responsibility to pay payroll taxes for their American employees. I commend Senator Kerry for his leadership on behalf of America's small businesses, workers, and service members and I call on the President to sign this bill into law."

The HEART Act includes several provisions included in legislation introduced by Kerry and Senator Gordon Smith (D-Oregon) in January of 2007. The Active Duty Military Tax Relief of 2007 aimed to bolster military families and small businesses that employ reservists.


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