Excess-profits tax on defense contractors during wartime is long overdue

[unhappycamper]

http://www.washingtonpost.com/world/national-security/excess-profits-tax-on-defense-contractors-during-wartime-is-long-overdue/2012/12/31/c8f03416-513f-11e2-950a-7863a013264b_story.html

Excess-profits tax on defense contractors during wartime is long overdue
By Walter Pincus, Published: December 31

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My most radical idea — and it should have been done 10 years ago — is for an excess-profits tax on defense contractors while we have troops fighting overseas. As I have often noted, Afghanistan and Iraq are the first U.S. wars in which taxes were not raised to pay for the fighting. Instead, the cost has been put on a credit card.

~snip~

Since 2002, profits of the five largest U.S.-based defense contractors have “increased by a whopping 450 percent,” said Lawrence J. Korb, senior fellow at the Center for American Progress.

Profits of the five rose from $2.4 billion in 2002, adjusted for inflation, to $13.4 billion in 2011, according to an August study co-written by Korb, a former assistant secretary of defense for manpower during 1981-85 and an expert on Pentagon spending

“This success applied both to companies with large civilian sections of their businesses and to those almost wholly dependent on defense funding,” Korb wrote. He noted that defense profits faltered at the beginning of the recession but “rapidly recovered, rising over 40 percent between 2008 and 2011 and nearly returning to their 2007 peak.”