General and Administrative (G&A) is not profit. Nor does the Weighted Guidelines (DFARS 215.404-71), the DoD's structured approach to profit required by FAR of all agencies, require taxes be subtracted from total cost, including G&A, as the base for applying the various profit factors.
G&A is a cost pool consisting of various kinds/types of cost (e.g. payroll, accounting, fringe benefits, facilities, selling expenses, etc.) that typically benefit many different contracts. Consequently, they are combined in the G&A pool and then allocated across all the different contracts using an allocation rate. Whatever base is chosen to develop, or calculate, the contractor's plant-wide G&A allocation rate is then that same base to be used, contract by contract, in applying that G&A rate so that each contract picks up their allocable share of the all the support expenses combined into G&A pool.
If the contractor uses a Total Cost Input (TCI) base to allocate/calculate their plant-wide G&A rate; all their plant-wide costs (except G&A) required to perform ALL their contracts, both direct (e.g. material, labor, other direct, or ODC costs) and indirect (e.g. overhead) will be added together for a grand total, plant-wide, TCI. Their total G&A support expenses are next divided by this TCI base resulting in their G&A rate. Their allowable G&A costs are thus recouped, contract by contract, by applying this rate to all costs, direct and indirect, representing the TCI for that contract. Thus all the direct cost (material, engineering labor, manufacturing labor, and ODC cost) and indirect costs (material, engineering, and manufacturing overhead) for that particular contract effort will be added together for application of the G&A rate.
As a cost category, taxes may appear either as a direct, or indirect, cost of a contract. As a direct cost it might be listed as an "other direct cost" (ODC) of that contract. But if indirect, they may have already been included in an overhead or G&A account, or pool, used to generate these indirect rates - and the application of those rates in the pricing action at hand will cause the contract to pick up an allocable share of those taxes as well. The regulations permit taxes to go either way. See FAR 31.205-41 as a start for researching the allowability of taxes and how they might be handled either directly or indirectly.
If your contractor uses a TCI base to allocate G&A, and they have included the taxes they are proposing as an ODC on your contract in the plant-wide base to calculate the G&A rate; absent any special provision in the contract to not apply G&A on taxes, these ODC costs would receive an allocation of G&A by including them in the base for your G&A calculation in pricing your contract.
While TCI is one of the more commonly used bases for allocating G&A on government pricing actions, the regulations permit the use of other bases such as the single element (SE) base. Under the SE base for allocating G&A, they would perhaps just use direct labor cost to develop/calculate their plant-wide G&A rate. If that is the case, then the taxes being proposed as an ODC on your contract would NOT be included for application of the G&A rate. But that is simply because NO other cost besides just the labor cost required for your contract would be included in the base for applying the G&A rate in your pricing action.
Absent any general or special provision(s) of the contract that would otherwise restrict either the application of a rate such as a G&A, or allow a specific cost such as G&A in any form; the general rule of thumb is, if the cost was included in the base to begin with when the contractor calculated the rate on a plant-wide basis, then this cost should also be included when applying the rate in an individual pricing action to facilitate the contractor recouping the cost, should it be an allowable cost.