Marketplace, April 14, 2004
Over the past four decades, the share of federal revenues coming fromcorporations has dropped by two-thirds, from 21 percent of governmentrevenues in 1962 to only 7 percent last year. Who's made up the difference?You and me, of course.
America gasped when it learned that Enron didn't pay a dime of taxes on $2billion of reported earnings between 1996 and 1999. Well, it turns out Enronwasn't exactly an exception. A new study by the General Accounting Officeshows that between 1996 and 2000 - years of record profits for Americanbusinesses - fully 60 percent of large corporations paid no taxes at all.And you can bet they haven't paid any taxes since.
What's going on? Three things. First, a growing industry of accountants,lawyers, and tax advisers specializing in corporate tax avoidance - andpocketing up to a third of what they save their corporate clients. Talkabout contingency fees. They're still at it - devising ever more complexschemes for sheltering corporate income - often involving foreign taxhavens, offsetting taxable losses, dummy corporations and special-purposeentities.
Second, a growing cadre of Washington lobbyists and their congressionalpatrons who lard the tax code with special corporate tax breaks -amendments, exceptions, exemptions, sub-clauses -- provisions often socomplicated that nobody other than the lobbyists who insert them can findthem.
And third, not nearly enough enforcement staff at the IRS - especially inlight of how much time it takes to audit the tax returns of the corporationsthat are creating and exploiting every tax dodge imaginable. A new study byresearchers at Syracuse University shows that the rate of IRS audits ofAmerica's 11,200 largest corporations has fallen by almost half over thelast decade. The audit rate of corporations of all sizes was only 7.3percent last year, down from almost 30 percent a decade ago.
What's the answer? Well, this one isn't complicated, folks. Bar tax advisersfrom pocketing a portion of the money they save their corporate clients.Simplify the tax code - get rid of all corporate welfare in the form ofspecial tax breaks. And beef up IRS enforcement.
Easier said than done. You see, big corporations have lot of politicalclout. And you don't. That's why you're paying more in taxes, while bigcorporations are paying less ... and usually, nothing.
