Individual income tax payments have been rising fast since the economy began to recover, even though wages have hardly budged. But the same isn’t true for taxes for most corporations.

For the vast majority of America’s 5.8 million corporations, profits soared in 2010 — up 53 percent compared to 2009 — when the recession official ended at mid-year. Despite skyrocketing profits, however, their corporate income tax bills actually shrank by $1.9 billion, or 2.6 percent.

The effective tax rate paid by 99.95 percent of companies fell to 15.9 percent in the robustly profitable year of 2010, from 24.9 percent in the half-recession year 2009.

Those figures do not count the 2,772 companies that dominate the American economy. These giant firms, with an average of $23 billion in assets, own 81 percent of all business assets in America.

Their combined profits soared 45.2 percent to a new record in 2010, but their taxes rose just 14.8 percent, new IRS data show. Profits growing three times faster than taxes means their effective tax rates fell.

In 2010 these corporate giants paid just 16.7 percent of their profits in taxes, down from 21.1 percent in 2009. The official tax rate is 35 percent.

These figures, which I distilled from the latest IRS data on corporate tax returns, come as Senator Max Baucus, the Montana Democrat who chairs the Senate Finance Committee, and Representative Dave Camp, the Michigan Republican who chairs the Ways and Means Committee, are traveling the country promoting a reduction in the corporate tax rate. Baucus’ final term ends on Jan. 2, adding urgency to their drive since Baucus is a reliable friend of big corporate interests — of which there are few in Montana, one of the poorest states.

Corporate lobbyists swarming over Capitol Hill for the past year have asserted that the current official tax rate is much too high because our economic competitors have lower rates. The drive right now is for a 25 percent rate, but the ultimate goal is to end the corporate income tax, which began in 1909, without any new rules to prevent corporations from becoming bloated with cash, as I revealed a year ago in Reuters.

Profits way up, taxes down, is not what our myths about taxation lead us to expect. These figures show that the endlessly repeated claim that American corporations are overtaxed is bunk.

The reality is that the tax rates written into law, and used on corporate profit and loss statements, bear little relationship to actual taxes paid. And the beneficiaries of this gap between posted rates and paid rates are primarily the very biggest corporations, many of which have figured out how to profit off the tax system (as I first showed in 2002). In a previous National Memo column, I showed how Apple makes money by profiting today and paying its income taxes much later, if ever.

A July 1 report to Congress suggests the rate on large profitable firms may be even lower than what is shown in publicly available IRS data. The 2010 net tax rate was really just 12.6 percent, according to the Government Accountability Office — the investigative arm of Congress — which had access to secret documents.

Going forward, the Obama administration predicts that Washington will rely more on individual income taxes and less on corporate taxes.

Between fiscal 2010 and fiscal 2018, individual income taxes will rise from 41.5 percent of federal revenues to 49.8 percent, an increase of 8.3 percentage points, the president’s proposed fiscal 2014 budget shows. Corporate income taxes – assuming current statutory rates – are expected to grow by only 2.4 percentage points from 8.9 percent in 2010 to 11.3 percent of federal revenues in 2018.

That corporations large and small paid less than half the statutory tax rate in 2010, and much lower rates than in the half-recession year of 2009, casts doubt on whether corporate tax rate cuts are needed to improve global competitiveness.

At a minimum the new figures raise questions about whether good tax policy, or political exploitation of corporate rent-seekers, is driving the debate over corporate tax rates and whether it is really a debate over tax favors for corporations with Friends In Congress.

In a troubling sign that good politics has already trumped good tax policy, Baucus and Camp have asked fellow lawmakers to tell them which tax favors they want to retain.

This is sure to bring a deluge of campaign donations (and other favors for politicians,) as those fearing loss of their tax breaks dig into corporate coffers to protect them — a method of extraction facilitated by the Supreme Court’s 2010 Citizens United decision that made campaign donations as unfettered as political speech.

Paying a shrinking share of profits in taxes is just part of what corporate America buys with campaign donations and perks for politicians, and helps explain why many millions still struggle in the economic doldrums five years after the government rescued Wall Street from its own fraudulent sales of mortgage securities.

Oh, and don’t forget that government rules make it very hard to determine precisely how much those big, mostly publicly traded companies actually paid in taxes. Government rules require big companies to disclose to the dollar how much they put into each CEO’s 401(k) plan even though it may be only a few thousand dollars, but not the amount of federal corporate income tax on its tax return.

Keep in mind that while America has 5.8 million corporations, a relative handful of big companies dominate the economy. The 2,772 corporate giants with $2.5 billion or more of assets own 81 percent of all the business assets in America. The biggest of these — like Walmart, ExxonMobil and General Electric — rent lawmakers as needed.

Those rents – er, donations and perks – also ensure that those appointed to regulatory agency boards do well after they leave office, provided they have been good servants to corporate interests. Tricks like making customers pay taxes to monopolies that are exempt from the corporate income tax are one way that those appointed to regulatory boards will do well when they leave the government payroll, as my book The Fine Print revealed.

The corporate giants quietly lobby for laws and regulatory rules that get little to no attention in the mainstream news.

GE spent $39.3 million just on Washington lobbying in 2010, more than $73,000 per senator and representative.

ExxonMobil has spent on average almost $23 million annually lobbying Washington in 2008 through 2010. Walmart has spent between $6.2 million and $7.8 million lobbying Washington each year since 2008.

Lobbyists for these and other corporations have lawmakers on speed dial. As for you, just try to get a face-to-face appointment with your senator or representative. If you try, whether you succeed or fail, please tell me about it in an email to davidcayjohnston@me.com.