Last week, the Governmental Accountability Office released a study of corporate income taxes paid for the years 1998 - 2005. Findings: for most of that period - roughly two-thirds of the time - firms did not report a US tax liability.

There was slightly more of a tendency for foreign-owned firms (50% or more of voting stock owned by a foreign entity) to report zero liability that for US-owned firms. In both cases (foreign-owned versus US-owned), firms paying no taxes tended to be smaller firms. (Firms were considered large firms if they had assets greater than $250 million and $50 million of revenues.)

Don't jump to conclusions about tax chicanery. There's one important attribute of the findings that the GAO listed in the first paragraph of the report:

"Most large FCDCs (foreign-controlled domestic corporations) and USCCs (US-controlled corporations) that reported no tax liability in 2005 also reported that they had no current-year income. A smaller proportion of these corporations had losses from prior years and tax credits that eliminated any tax liability."

So, while it carries a populist tune in an election year, some of that tax non-payment might be totally legitimate: income is a necessary condition for an income tax, right? And the crazy-quilt patchwork of a tax code lets firms turn losses into assets to be applied to taxes later, and credits shelter the income of favorite son industries. So that "two out of three IS bad" label might not really stick.

What it might mean though, is that the corporate tax code is badly in need of repair. That subject is nicely teed up in "A World of Wealth: How Capitalism Turns Profits Into Progress," which I enjoyed on my vacation last week. It's the work of Thomas Donlan, Barron's editorial page editor, and it's a terse primer on economics, capitalism and capitalistic solutions to modern problems. (Briefly: prices help do the job of solving most problems, and they do it best when they're left alone.) One issue Donlan raises: why have a corporate income tax at all? In the end, it isn't the company paying the tax; according to the GAO, there isn't even the appearance of most firms paying a corporate income tax in recent history. Where taxes are paid, however, the normal corporate behavior is to build the tax into the prices of the goods and services sold to consumers. Why continue the charade? Take the taxes off the corporations and everyone benefits - except maybe corporate tax shelter promoters, tax accountants and tax lawyers.

Donlan riffs on a variety of issues, from oil prices to greenhouse gases to immigration and taxes, with a zeal for capitalism that's clearly evident in his entertaining and breezy style. Quick, read it before the summer goes - and at the latest, before you vote in November.