HEN IT COMES to taxes, Americans are being distracted by a Punch and Judy show - George W. Bush and Al Gore whacking away at each other over tax cuts for individuals. Bush wants a big cut. Gore wants a smaller cut. But other tax issues crave attention. Why, for example, are major companies getting away with paying little or no corporate taxes?
Bush keeps saying it's wrong for the president to pick winners and losers by deciding who gets a tax cut and who doesn't. But this is precisely what's happening with companies.
The corporate tax rate varies with income, but averages out to 35 percent. However, a new report from the Institute on Taxation and Economic Policy, a nonprofit research organization in Washington, D.C., says that many major companies pay at lower rates, pay no taxes at all, or get rebates - because of tax breaks for politically wired companies.
In 1998, the lucky rebate check winners included Texaco, which ended up with a minus 37.2 percent tax rate on profits of $182 million; Pepsi, which had a minus 19.1 percent rate on profits of $1.6 billion; and Pfizer, with a tax rate of minus 16.5 percent on profits of $1.2 billion.
The uneven tax rates strike across and within industries. From 1996 to 1998, publishers paid a 31.6 percent tax rate. The rate for oil companies was only 12.3 percent.
And both General Electric and Maytag make kitchen appliances. The difference: In 1998, GE had a tax rate of 8 percent, while Maytag's rate was 33 percent.
In 1986, Congress passed the Tax Reform Act to close such loopholes. Over time, though, companies have found ways to shelter profits.
Last year, the US Treasury Department started sounding its own alarm - issuing a white paper titled ''The Problem of Corporate Tax Shelters.'' Treasury documents submitted to the Senate Committee on Finance said, ''We believe that the use of corporate tax shelters currently represents the most serious compliance problem facing our tax system.'' And that ''corporations distort their business decisions to take advantage of tax shelter opportunities.''
What should the country do? Overhaul the tax codes. This includes requiring companies to disclose more detailed tax information, increasing penalties for understating income tax, and reviewing the list of corporate tax breaks to see which ones might be revamped.
The First Amendment guarantees everyone's right to drone on about personal responsibility. But it makes more sense to shine the public spotlight on real, costly problems, such as the report's finding that from 1996 to 1998, 250 companies got $98 billion in tax reductions. Improving tax policies could promote fairness and a healthier tax base.
