Like little kids who squirm through dinner until they can finally grab for dessert, Corporate America in the last few months has had a hard time controlling its hunger for corporate tax cuts and new tax subsidies.

With President George W. Bush making his giant tax gift to rich individuals his first major legislative priority, the administration asked Big Business to hold off on its request for corporate tax breaks.

For weeks on end, the corporate tax lobbyists worked hard to control themselves, sitting quietly while Congress debated whether the targeted tax cut for the wealthy should total $1.3 trillion or $1.6 trillion over the next decade (actually much higher with honest accounting).

But as time wore on, the waiting simply became too much, especially as it became more and more clear that the Bush administration was going to be able to ram through its tax gift to the rich. When talk started to emerge of a Democratic push for a minimum wage hike, it was more than the corporate tax lobby could stand. The business lobbyists immediately began scheming over which corporate tax cut they could attach to a minimum wage increase.

And that's just the beginning. In a blockbuster interview with the Financial Times earlier this week, Treasury Secretary Paul O'Neill said he "absolutely" backs the abolition of taxes on corporations. That's abolition as in all federal income taxes.

"The clear economic truth is that businesses and corporations don't pay taxes, they just collect them for the government," O'Neill told the Financial Times. "Because businesses and corporations have to recover all of their costs and earn the cost of capital, after all of their expenses including taxes."

O'Neill's argument is that it is irrational to force corporations to pay taxes, rather than individuals, since corporations just pass on the cost of taxes to consumers. This argument ignores the evidence showing that corporations cannot simply pass all costs on to consumers. The underlying notion that corporations just represent the sum of interests of shareholders ignores the fact that corporations retain huge earnings, and the institutional reality that corporations have a life, identity and existence of their own, beyond that linked to shareholders. Above all, the argument that corporate taxes should be eliminated, with taxes collected instead from individuals only, is--from an administration that is right now pushing through a massive tax cut for individuals--a spectacularly brazen effort to shrink government revenues and the potential scope of government activity.

There is little chance of business registering an accomplishment as breathtaking as O'Neill's proposal, at least in the short-run, but the corporate lobby may well seek a reduction in its tax rate to match the rate slashes for rich individuals in the Bush plan. And Big Business will be able to use O'Neill's sentiment to argue that the corporate tax rate should be progressively driven down, towards zero.

If the big corporations get their way, and manage to attain significant tax cuts of one kind or another--and there is plenty of reason to expect they will--it will continue a 30-year trend.

Three decades ago, corporations paid about a quarter of all U.S. federal taxes. Now the corporate share is down to approximately 10 percent.

The nominal tax rate on corporations is 35 percent, but the effective tax rate on big corporations is approximately 21 percent, according to the Washington, D.C.-based Citizens for Tax Justice (CTJ).

A 2000 CTJ study of the 1998 income tax payments of 250 of the largest corporations determined that two dozen had negative federal income tax payments--meaning they received rebate checks from the U.S. Treasury. Led by General Electric, which finagled just under $7 billion in tax breaks in 1998, at least 25 corporations, including Ford, First Union, AT&T, Bell Atlantic, Merck, Microsoft, Bristol Myers-Squibb and Exxon--exploited tax loopholes to gain at least $1 billion in tax breaks, according to CTJ. (Someone should ask Paul O'Neill: Did these corporations offer lower prices to consumers?)

Key corporate tax escapes include complicated financial transactions and transfer pricing which enable corporations to claim earnings outside of the United States and in lower-tax jurisdictions; accelerated depreciation schedules for corporate investments; tax rules that enable companies to claim stock options as an expense, even though the options are issued at no cost to the company; and targeted tax provisions that confer benefits on specific industries.

Politically, it should be harder to push through significant corporate tax cuts than the tax reductions for individuals. There is little doubt that public confusion about who will benefit from the Bush plan, and how much, has been key to enabling its passage. O'Neill's dissembling notwithstanding, average people are less likely to be under the illusion that corporate tax cuts will put money in their pocketbooks.

On the other hand, from the corporate point of view, almost anything and everything seems possible in today's Washington.

Russell Mokhiber is editor of the Washington, D.C.-based Corporate Crime Reporter. Robert Weissman is editor of the Washington, D.C.-based Multinational Monitor. They are co-authors of Corporate Predators: The Hunt for MegaProfits and the Attack on Democracy (Monroe, Maine: Common Courage Press, 1999).

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