A Modest Proposal

Next time the presidential candidates get around to debating what to do about corporate income taxes, here's one option they might consider: Start actually collecting some.

A new report from the Government Accountability Office has concluded that two-thirds of U.S. corporations paid no federal income taxes between 1998 and 2005. Foreign corporations operating in the U.S. paid even less often, the G.A.O. said.

That period, which goes back a decade and includes the most recent figures, fell within the Great Bull Market. Even with the telecom-bubble bust, the Standard & Poor's 500 index rose 30 percent in those years; the blue-chip Dow Jones industrial average gained even more.

Stocks rose as much as they did because corporate profits were growing rapidly: up 80 percent in those seven years, according to Bureau of Economic Analysis statistics.

In 2005, the most recent year for which the G.A.O. reviewed corporate tax returns, 1.2 million domestic and 38,000 foreign corporations -- with aggregate sales of $2.5 trillion -- paid no U.S. income tax.

Some of the companies reviewed were limited-liability companies and so-called "S" corporations that distribute all profits to their partners each year, and those profits are then taxed as individual income.

About one-fourth of the domestic companies that didn't pay corporate income tax were classified as large corporations because they had $250 million or more in assets, or revenue of at least $50 million.

"It's shameful that so many corporations make big profits and pay nothing to support our country," said Senator Byron Dorgan, Democrat of North Dakota, one of the legislators who asked for the study. "It's time for the big corporations to pay their fair share."

by Mark Stein