"Had Senators been aware of this information . . . they likely would have rejected this overly narrow corporate tax cut for the 'Fortunate 500,' " lobbyists seeking to scuttle the measure wrote in private talking points.
Senate Finance Committee aides said that charge is unfair because the whole bill offers more than $167 billion in tax cuts for manufacturers over 10 years. If some businesses do not benefit from the centerpiece tax-rate reduction, they likely would benefit from other aspects.
"The Senate bill contains several provisions to help companies that are not currently profitable," said the committee's chairman, Charles E. Grassley (R-Iowa).
The findings by the Joint Tax Committee, the chief repository of tax analysis in Congress, found that the vast majority of companies would receive a tax benefit of less than $50,000, if they receive a benefit at all. But Grassley aides said a $50,000 benefit is substantial to a small manufacturer.
Rockefeller and Sen. Arlen Specter (R-Pa.) are pushing an alternative that would offer manufacturers a choice between the tax rate cut and a federal tax credit to offset health care costs. In an interview yesterday, Specter argued that this would more fairly distribute benefits by helping companies saddled with huge health care liabilities from retirees and aging workers.
"As a matter of equity, these are significant players in the economy, and it would help the economy a lot to recognize these legacy costs," Specter said.
The federal government routinely makes payments to poor individuals based on tax credits, but Senate Finance Committee aides said the government has never granted such "refundable tax credits" to businesses.
"Creating a refundable general tax benefit for businesses would cross a very controversial line, one that could have taxpayers paying for a company's ordinary business expenses," Grassley said in a statement.
But some corporations that stand to benefit little from the existing measure may be willing to scuttle the whole bill in hopes that the next go-round will prove more favorable, lobbyists close to the effort said.
All three U.S. automakers -- Ford Motor Co., General Motors Corp. and DaimlerChrysler AG -- have sent representatives to Capitol Hill to argue that the pending measure will be of more help to foreign competitors such as Toyota Motor Corp. than it will be to them.
Steelmakers also have been complaining. U.S. Steel Corp., for instance, figures that it wouldn't have benefited in 2002 or 2003 if the corporate-deduction provision were law now, because it had a net loss last year and earned only a slight profit the year before, according to Scott R. Salmon, U.S. Steel's director of government affairs.
U.S. Steel estimates that it could save $20 million in taxes a year if it could apply Specter's proposed 10 percent credit to its $200 million in retiree health expenses.
The Joint Tax Committee looked only at corporations registered as "Subchapter C corporations," the usual way major businesses file with the Internal Revenue Service. The Senate measure also applies to small businesses and partnerships, which did not fall under the analysis.
But even if the committee had looked at all those businesses, the distribution of the $63.3 billion tax benefit would not have changed much, since most of those small businesses and partnerships have small profits, tax experts said.