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Whacking the Fat Cats ... not
The presidential tax reform panel missed the real problem ... freeloading corporations.
October 21, 2005: 8:34 AM EDT

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NEW YORK (CNN/Money) - The American people have a bone to pick with the Presidential Tax Reform Panel. And Big Business owes it a beer.

You know the outfit I'm talking about ... the nine folks who were supposed to come up with a way to make our tax system fairer and simpler. Well, this week it finally came up with a plan of action ... okay, technically, two.

Either way, it all adds up to malarkey.

It's not that the panel members didn't have some good ideas. They did. Eliminating the marriage penalty and that &*%**#$ alternative minimum tax are damn good ideas. (Yes, I'm married and get hit with the AMT)

But to pay for those good moves, the panel is playing tired old games with other parts of the tax code and poking at sacred cows like the mortgage interest deduction and healthcare benefits. (You can read a summary of their plans here).

If they really wanted to do us a favor, the panel would have whacked corporations.

Warren Buffett is the one who clued me into this in his 2003 letter to Berkshire Hathaway shareholders. He had this little factoid: In 1952, corporations accounted for 32 percent of federal tax receipts (the post-war peak). In 2003, corporations accounted for 7.4 percent of federal tax receipts.

That just doesn't seem fair, does it? I checked for 2004. Corporations paid 10.6 percent of the tax bill -- $184.8 billion. Reminder: our federal budget deficit is about $413 billion. If corporations were kicking in at the old 1952 rate, we'd have no problem.

Sure, there are those who argue that corporations shouldn't have to pay as much tax as the rest of us. They foot the bill in other ways, like benefit contributions, and are made up of a bunch of little people who pay taxes. And they are owned by shareholders who pay taxes. Why tax twice, comrade?

Baloney.

In the eyes of the law, a corporation is an entity. More to the point, they are protected by the same Army as me, the same police as me, and the same FEMA as me (ha! that scares 'em). And they have the benefit of the same roads and airways as me. And, when it comes to government handouts and public education, they get much more than me.

They can pay the same taxes as me.

But they don't. They dodge and they lobby. They get tax breaks for tackle boxes, archery equipment, rum, ceiling fans and reams of other little products and activities tucked into the tax code.

Did the tax panel attack this? Nah. And that's predictable. Panels like this never truly offer reform and are usually just a delaying tactic by a government desperate to punt on an issue.

Like Concrete Blonde ... okay Leonard Cohen ... says "... the rich get rich and the poor get poor/that's how it goes/and everybody knows."

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Allen Wastler is Managing Editor of CNNMoney.com and appears on CNN's "In the Money." He can be emailed at wastlerswanderings@cnn.com.  Top of page

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