An occasional report on the bizarre and incredible

As the saying goes: Life is not fair. But that doesn’t mean the federal tax code can’t be. After all, it is a system devised by the very men and women that citizens elect to Congress and the White House to represent their interests.

A study released last fall, however, reveals exactly who is controlling U.S. tax policy—corporate America. According to the study, “Corporate Income Taxes in the Bush Years,” a joint project of Citizens for Tax Justice (CTJ) and the Institute on Taxation and Economic Policy (ITEP), 46 profitable Fortune 500 corporations paid no federal income taxes in 2003, up from 42 corporations and 33 corporations in 2002 and 2001, respectively.

In fact, some of the corporations not only paid nothing, they got refunds from the federal treasury. For example, in 2003, with more than $1 billion in profits, Boeing, which Hoover’s Online describes as “the 800-pound gorilla of U.S. aerospace,” had an effective tax rate of minus 159 percent. Prudential Financial had back-to-back years of profits—$101 million in 2002 and $336 million in 2001—yet it had a negative effective tax of minus 124 percent in 2002 and minus 304 percent in 2001.

The study, written by CTJ director Robert S. McIntyre and ITEP’s T.D. Coo Nguyen, is available at www.ctj.org. It covers 275 corporations that cumulatively made $1.1 trillion in the United States over 2001-2003.

“The sharp increase in the number of tax-avoiding companies reflects the results of aggressive corporate lobbying and a White House and Congress eager to do the lobbyists’ bidding,” said McIntyre, noting that corporations slash their tax bills through loopholes and other congressionally passed tax subsidies as well as by shifting profits on paper to offshore tax havens.

“Corporate taxes paid for more than a quarter of federal outlays in the 1950s and a fifth in the 1960s,” according to the report. “They began to decline during the Nixon administration, yet even by the second half of the 1990s, corporate taxes still covered 11 percent of the cost of federal programs. But in fiscal 2002 and 2003, corporate taxes paid for a mere 6 percent of our government’s expenses.”