Baucus Returning Campaign Donations From Defense Contractor

By Beacon Staff

HELENA – U.S. Sen. Max Baucus is returning more than $20,000 in campaign donations to defense contractor L-3 Communications Holdings and its executives after a subsidiary came under scrutiny for setting up shell corporations in offshore tax havens, spokesman Barrett Kaiser said Thursday.

“As soon as Max heard about the situation, he immediately directed his campaign to return every penny to L-3 executives,” Kaiser said in a statement. “Now he’s aggressively investigating the situation in the Finance Committee and supporting legislation to crack down on that kind of abuse.”

The Boston Globe and the Wall Street Journal reported earlier this month that L-3 subsidiary MPRI, which has millions of dollars in federal defense contracts, had set up companies in Bermuda and the Cayman Islands to subcontract the defense work.

Baucus, chair of the Senate Finance Committee, received $20,250 from L-3 and its executives at a March 17 fundraiser.

The House passed a bill last month that would treat foreign subsidiaries of U.S. government contractors as American employers, subjecting them to IRS audits and enforcement. Lawmakers say the legislation is an attempt to close a loophole that allows defense contractors to avoid paying payroll, Social Security and Medicare taxes.

Sens. John Kerry of Massachusetts, Barack Obama of Illinois and others announced on March 13 that they were introducing similar legislation in the Senate.

The Joint Committee on Taxation estimates shutting the employment tax loophole would bring about $846 million in revenue over 10 years.

Baucus expects the Senate Finance Committee to act on the legislation within the next few weeks, Kaiser said.

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