Tax Lawyer's Blog

Congratulations, Mr. President. You’ve finally delivered on some of that “change you can believe in” you promised back in 2008.

Sunleen Miller of ABC News.com reports that President Obama has called for an end to the granting of government contracts to companies that are delinquent in their federal taxes:

Calling out “deadbeat companies” that are being awarded government contracts while delinquent in their taxes, President Obama today signed a presidential memorandum to stop these companies from collecting government contracts while they are “gaming the system.”

“In a time of great need, when our families and our nation are finding it necessary to tighten our belts, and be more responsible with how we spend our money, we can’t afford to waste taxpayer dollars,” Obama said from the Eisenhower Executive Office Building this morning, “And we especially can’t afford to let companies game the system. We need to make sure every tax dollar we spend is going to address our nation’s urgent needs and to make a difference in the lives of our people. “

The President said that the total amount owned in unpaid taxes by companies is estimated at more than $5 billion.  Allowing this, he said, is not only inefficient and wasteful but it’s “simply wrong,” for companies to take taxpayer dollars and not be taxpayers themselves.

President Obama deserves kudos for this for three reasons:

1. Government contracts should only be rewarded only to responsible, “good citizen” businesses, not those who either aren’t run efficiently enough to comply with federal tax laws or are intentionally failing to comply with those laws;
2. The tax gap should be closed and government waste eliminated before the government asks for a raise (i.e. increases taxes); and
3. This really is change we can believe in.

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