The current system is "an abomination," O'Neill told the London-based Financial Times in an interview.

O'Neill had discussed his views about the corporate tax at his Jan. 17 Senate Finance Committee confirmation hearing, said his spokeswoman, Michele Davis. She said O'Neill wants Bush's $1.35 trillion tax cut plan enacted and then changes made in Social Security before revamping the tax code.

The former Alcoa Inc. chief executive said in January that "our tax system is not worthy of an advanced society and I really think we need to do something about it," according to a hearing transcript. "We maintain the fiction that corporations pay taxes. Corporations collect taxes, they don't pay them."

His comments to the newspaper come as the Senate considers Bush's tax bill, which includes provisions to cut income taxes, repeal the estate tax and give tax breaks to married couples and parents.

The treasury secretary said abolishing corporate taxes would lead to higher individual taxes, though it would promote economic growth. The system would work better if the government "collected taxes in a more direct way from the people, who were paying the taxes in any event," he told the newspaper.

O'Neill also questioned government subsidies for elderly health care and for pensions, and said he wants to abolish income and capital gains taxes for corporations, the newspaper said.

© 2001The Washington Post Company

###