Typically, an accounting firm such as Kies's will offer to sell a shelter to a corporation in return for a hefty chunk of the savings. The shelters cooked up by such firms are usually fantastically complex schemes that involve economically meaningless transactions designed solely to avoid taxes. Companies devote brilliant minds and billions of dollars to sophisticated paper-shuffling. Of course, a dollop of economic inefficiency might be acceptable if the beneficiaries were, say, minimum-wage workers. But tax-sheltering creates the worst of all economic worlds.
Nobody knows precisely how much corporate tax-sheltering goes on.
But evidence suggests it has shot up in recent years. Corporations always report more income to their stockholders than to the IRS, but the gap between the two groups' information has widened. Moreover, in the last five years, corporate tax receipts have grown at less than one-fifth the rate of individual tax receipts. Last year, during an economic boom, corporate tax revenues actually fell. One reason is the mismatch between the cops and the robbers.