Bradley seeks end to $125 billion in tax breaks for corporations

Presidential hopeful repackages reforms to reduce business influence

January 05, 2000|By Jonathan Weisman | Jonathan Weisman,SUN NATIONAL STAFF

WASHINGTON -- Former Sen. Bill Bradley yesterday proposed ending corporate tax breaks worth $125 billion over 10 years, seeking to sharpen his image as a political reformer while answering charges that he cannot pay for his policy proposals.

The boldest of Bradley's initiatives -- stiffer penalties for corporate tax scofflaws, higher federal mining and grazing fees and the reinstatement of lapsed environmental taxes -- have long been embraced by the Clinton White House, though they have been ignored by Congress.

But the Democratic White House hopeful has repackaged the proposals not simply as a way to raise revenue, as President Clinton proposed, but as a way to rid Washington of the corrosive influence of corporate money.

"When a tax break is created to help only a few people or a company finds a way not to pay taxes, we all end up paying more," Bradley told business leaders in Bedford, N.H.

In the final sprint toward the primary season, taxes are emerging as a key issue in the Democratic and Republican contests. Bradley's rival, Vice President Al Gore, has proposed up to $300 billion in tax breaks and incentives and would pay for most of it out of the projected federal budget surplus. Gore has goaded Bradley into producing a tax plan of his own.

Bradley, the architect of the 1986 tax reform law that curbed many loopholes, countered not with tax cuts but with a get-tough policy on corporate tax cheats.

On the Republican side, Texas Gov. George W. Bush has proposed an ambitious five-year, $483 billion tax cut that would more than consume the budget surplus as it is now forecast.

Campaigning in New Hampshire yesterday, Bush jousted with his leading Republican rival, John McCain, over taxes, charging that the Arizona senator's plan is not generous enough.

"My plan not only is just right," Bush said of his tax proposal, "it's realistic. It can get done, and it's going to make a big difference for the country."

McCain has called Bush's plan far too expensive. Next week, his aides promised, the Arizona senator will unveil his own tax proposal, which will include an expansion of the lowest tax bracket and loophole closures that his aides say will be more valuable than Bradley's.

By closing loopholes and ending some government programs, McCain plans to ensure that much of his tax cut could be paid for, regardless of whether projected surpluses materialize, an aide said. But it remains to be seen whether such populist issues as corporate tax loopholes will hold much appeal at a time when the economy is strong and voter anger is low.

Ari Fleischer, a Bush spokesman, shrugged off McCain's pending tax proposals, noting that closing tax loopholes is, in effect, a way to raise taxes. Congressional Republicans have repeatedly characterized Clinton's proposals that way -- and to potent effect.

"Very often these are just tax increases in disguise," Fleischer said.

Indeed, at a time when some candidates are still railing against the Internal Revenue System, Bradley is proposing to make it easier for the IRS to crack down on tax cheats. Bradley aides noted that even as Clinton proposed closing corporate tax loopholes, the IRS was scaling back its enforcement role: Audits of corporations with at least $100 million in assets have sharply declined. In 1990, 59 percent of such corporations faced annual audits. In 1997, that figure had fallen to 35 percent, according to Kristen Ludecke, a Bradley spokeswoman.

Corporate tax receipts actually fell 2.5 percent between 1998 and 1999, despite a booming economy and no major changes in the tax laws. Even the Treasury Department has acknowledged that this is due to a proliferation of new corporate tax shelters.

Bradley proposed stepping up corporate audits; increasing penalties on companies that exploit tax shelters and the accounting firms that peddle such shelters; and requiring more rigorous tax disclosure to the IRS. Bradley estimated that those changes would bring in $100 billion over 10 years.

The Clinton administration floated similar proposals in its budget last year, and IRS Commissioner Charles O. Rossotti announced a corporate auditing crackdown in early November. The congressional Joint Committee on Taxation estimated that those proposals would save $10 billion over 10 years, a fraction of Bradley's estimate.

Bradley also proposed raising mining, grazing and oil exploration fees on companies and ranchers working on federal lands, a proposal similar to one made by Gore last year to pay for an environmental initiative. The former New Jersey senator would also reinstate environmental taxes that expired in 1995, a proposal pursued unsuccessfully last year by the White House.

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