Trained by Nader, This Populist Tax Lobbyist Takes Aim at Big Businesses That Avoid Taxes

By Alan Murray. Wall Street Journal. (Eastern edition). New York, N.Y.: May 2, 1985. pg. 1

WASHINGTON -- It was the day the American League play-offs dominated many newspapers, but the banner headline in the Los Angeles Herald Examiner passed over baseball's big sweep for another story: "128 big firms paid no federal income taxes."

That story and dozens like it which appeared across the country last October were the creation of Robert McIntyre, a rare populist among Washington's legion of tax lawyer-lobbyists. The stories told millions of Americans the results of Mr. McIntyre's study showing that big and profitable companies such as General Electric Co., W.R. Grace & Co., General Dynamics Corp. and Boeing Co. had no net federal income-tax liability between 1981 and 1983. With this and other activities there is little doubt that Mr. McIntyre has played a major role in the current debate over corporate taxation.

Trained under consumer advocate Ralph Nader, Mr. McIntyre works for Citizens for Tax Justice, a union-funded group battling to end tax preferences for corporations and the wealthy. His office is a cluttered cubicle donated by the Service Employees International Union. And while his $38,000 salary is a fraction of the money earned by most lobbyists, Mr. McIntyre appears to be having more influence on this year's tax debate than many of his corporate colleagues.

"He's on the ascent," says Mark Bloomfield, a law school classmate of Mr. McIntyre who now represents companies battling to retain their tax breaks. "We're just trying to hold on."

Mr. McIntyre doesn't dine at the expense-account restaurants frequented by Washington insiders, nor does he spend much time buttonholing members of Congress on Capitol Hill. His tools of the trade are simple: a well-used telephone, an IBM computer and a thorough knowledge of the tax code.

"If he were living in the 1930s, he'd be wearing a green eyeshade," says former mentor Mr. Nader.

But Mr. McIntyre uses his limited resources with skill. He compiles information in a way that catches people's attention, and he cultivates contacts with the media and congressional staffs that enable him to get his ideas aired.

"He can explain things in plain English that I can understand without being a tax lawyer or an economist," says Carolyn Blades, an aide to Rep. Thomas Downey (D., N.Y.). "There's no PAC money and no big power behind him, it's just the power of his ideas."

Indeed, Mr. McIntyre's arch-rival Charls Walker, the dean of Washington corporate tax lobbyists, admits Mr. McIntyre's corporate tax study has made him unusually influential in the current tax debate. "I have questions about his methodology, but he's certainly had an impact," says Mr. Walker.

Last year Mr. McIntyre sequestered himself in his office for four months, poring over the annual reports of 250 large and profitable corporations. He calculated each company's current taxes by subtracting all taxes that were "deferred" through accelerated depreciation or other means, and by subtracting any income a company earned through the sale of tax benefits under the short-lived "safe-harbor leasing" rules. The remaining taxes were then divided by the company's domestic profits, after taking out state and local taxes, to determine the effective tax rate.

The results were striking. Of those 250 companies, he calculated that 17 paid no taxes in each of the three years. Another 48 escaped taxes in two of the three. And 128 -- more than half the total -- paid no federal taxes in at least one of the years.

But the real attraction of the McIntyre study was the fact that it named names. The Joint Committee on Taxation conducts a similar study each year, but it only reveals effective tax rates for industries; it doesn't provide rates for companies.

The McIntyre study offered much more fertile material for grabbing public attention. In Trenton, N.J., for example, the head of a local tenants association was able to hold up a pack of General Electric lightbulbs and announce: "I paid more for three lightbulbs than GE paid in taxes from 1981 to 1983." And on national television, Sen. Robert Byrd (D., W.Va.) told of a woman in Milwaukee, Wis., "the mother of three children, who in 1983 earned $12,000. On that income she paid more in taxes than Boeing, GE, Du Pont and Texaco, all put together."

By naming names, Mr. McIntyre generated considerable irritation in corporate America. "His whole study is a pile of bunk," says John R. Mendenhall, vice president, taxes, at Union Pacific Corp., whose company showed a slim 3.5% tax rate in the study. And even Whirlpool Corp., showing the highest tax rate in the study at 45.6%, wasn't particularly happy about the publicity, but for a different reason. "It's a double-edged sword," explains Robert Kenney, the company's tax counsel. "We owe it to our shareholders to take legitimate and legal means to keep down taxes." The publicity surrounding the McIntyre report "gave me a lot of attention with senior management," he says.

But while corporate officials may quibble with Mr. McIntyre over the details of his calculations, few would dispute the direction and trend of his results. When the tax director at Commonwealth Edison Co. wrote Mr. McIntyre to tell him that its tax rate was 1.8%, not -0.1% as in the report, Mr. McIntyre wrote in response: "It's quite a reflection of the times when a company wants to brag about paying a 1.8% tax rate."

Treasury officials are reluctant to give Mr. McIntyre much credit, having grown accustomed to seeing him as the opposition on various tax issues. But his report has clearly helped boost their proposal to overhaul the tax system. And as a longtime