As the nation begins to contemplate the true impact of the "$350 billion" tax cut, some serious questions about the fiscal future of our government have begun to emerge. President Bush and other anti-government politicians like Tom Delay have indicated that this is the first of many tax cuts to come. They sold the tax cuts by repeatedly pounding dubious themes like "jobs and growth" and "stimulating the economy." Maybe they are sincere. But most economists agree that profligate tax cuts geared toward the very wealthy are a weak economic stimulus at best.

There is reason to believe that there is something more going on here than a misguided attempt at economic stimulus. There is reason to believe that these politicians actually have little interest in collecting any taxes, that they would prefer to see the government flounder and atrophy, shedding popular programs that benefit the poor and middle class like education and healthcare and even social security.

This suspicion was strengthened recently when we learned that the Administration suppressed a study commissioned by its own Department of Treasury, which projected a future budget deficit of $44 trillion.

Perhaps the best example of this in the tax bill was the way that a provision to close the loophole that allows U.S. corporations to move their headquarters to an offshore tax haven through a paper transaction disappeared from the bill behind the closed doors of the House-Senate conference compromise brokered by Vice President Dick Cheney.

This corporate tax dodge is one of those issues that should have been a political slam-dunk. This scam is projected to cost taxpayers billions of dollars a year and allows companies already well-known for having diminished ethical standards, such as Tyco and Global Crossing, to avoid paying their fair share of taxes. There are few politicians who could seriously get up and say that it's a good idea to allow corporations to move offshore to cheat on their taxes, especially when a simple legislative fix would stop it.

But although the Senate version of the bill included provisions to close the loophole, the compromise bill did not. Other Senate provisions to crack down on corporate tax cheating, such as strengthening the IRS's ability to go after tax shelters or preventing corporations that overstated their earnings from getting a rebate, also disappeared. But the disappearance of the offshore tax haven loophole provision is especially telling because it is such a clear-cut issue. The refusal to deal with this is certainly a telling indication that the leading powers in Washington simply have no interest in collecting taxes from the rich or corporate paymasters. If U.S. companies (like drug dealers and terrorists) are keeping their taxes safely buried on some island nation, apparently it is none of the government's business. Our leaders, it appears, would rather pile up a deficit.

This is not the first time that dealing with offshore tax cheats has been removed from a bill in conference. Last year, both the House Defense spending bill and the Senate Homeland Security spending bill included provisions to ban government contracts for corporations that have moved their headquarters to offshore to avoid taxes. Both provisions somehow disappeared behind the closed door of conference hearings.

As a result, corporations headquartered in offshore tax havens continue to get lucrative contracts from the U.S. government - approximately $1 billion worth last year, according to a recent Associated Press analysis. The leading offshore beneficiary of government contracts is Accenture (formerly Arthur Andersen consulting), which counts a consulting job for the IRS among its many contracts.

Jonathan Grella, spokesman for House Majority Leader Tom Delay (R-Texas), has said that the offshore reincorporation issue should be addressed - but as part of an overhaul of the tax system. Meaning: Delay believes the solution is to eliminate corporate taxes altogether. If that happens, someday our children will ask how we let the corporate expatriates and the rich sail away like pirates in the Caribbean, while the budget for their schools as well as other programs like Medicare and veterans benefits somehow disappeared into a Bermuda tax triangle.

Lee Drutman of Citizen Works can be contacted at: ldrutman@citizenworks.org

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