Yesterday, President Obama was humiliated by the results of the Massachusetts senate race.
Today, President Obama is responding by opening up ANOTHER new front in his war on American businesses. But this time, Obama isn't focusing on big "fat cat" bankers. Instead, he is focusing on smaller businesses:
President Barack Obama signed an order today directing the government to block contractors who are delinquent on their tax payments from obtaining federal contracts."Deadbeat companies." That sounds pretty good. Nobody likes a deadbeat, right?“Somehow, it’s become standard practice in Washington to give contracts to companies that don’t pay their taxes,” Obama said in Washington. “By issuing this directive, all of us in Washington will be required to be more responsible stewards of your tax dollars.”
The president also is directing the Internal Revenue Service to review the overall accuracy of companies’ claims about tax delinquency to be sure that when a company says it’s paying taxes, it’s not lying.
The Government Accountability Office has identified “tens of thousands of such deadbeat companies” that are late on taxes and yet obtained government contracts, Obama said. As an example, Obama said an unnamed defense contractor obtained federal work yet owed more than $1 million in taxes.
Source: Business Week
But Dean Zerbe, national managing director at alliantgroup LP and former tax counsel for the Senate Finance Committee, said the effort to clamp down on delinquent companies must be coupled with improvements in IRS service and protection of taxpayers rights. As of now, he said many businesses are struggling with "confusing notices and no one at the IRS to answer the phones."
"Pounding for pounding sake on business owners during this tough economy is going to be a job destroyer for business," Zerbe said.
Source: Wall Street Journal
Consider this: Big businesses have the legal and accounting teams necessary to decipher confusing tax codes. Smaller businesses are more likely to run afoul of the IRS - shutting them out of government contracts is a likely first step. Obama is also asking for Congress to get involved:
Obama asked for Congress's help in the proposed crack down, urging lawmakers to pass legislation that lets the IRS share information about tax delinquency with contracting officials. And he said the fiscal 2011 budget the White House releases on Feb. 1 will recycle a proposal from last year's budget that would require taxpayers to be paid before contractors with unpaid taxes.
Source: Wall Street Journal
In other words, President Obama is making it easier for big businesse to get government contracts, while opening up small businesses to increased IRS scrutiny. Andy Stern and the SEIU are probably lurking in the shadows of this issue somewhere... To be continued.
