In response to the Republican’s Taxpayer Choice Act offered earlier this month by reform-minded conservative Republicans, the most sweeping tax plan since Jack Kemp's three decades ago, the Democrats have countered with the Rangel-plan, a $3.5 TRILLION barrage of new taxes mostly on working to “pay for reducing the corporate income tax rate from 35% down to 30% and eliminating the AMT. Prompting the esteemed Wall Street Journal to call him “an honorary supply-sider,” at least regarding corporate taxes.
While the GOP plan would establish a radically simplified, flatter tax for an estimated 90 percent to 95 percent of all income-tax filers, the Democrats plan would mean higher taxes across the board for all working Americans, except those who incorporate.
Under the Taxpayer Choice Act taxpayers presumably would accept this offer: Give up all your current deductions, and your annual earnings up to $100,000 would be taxed at 10 percent, with a 25 percent rate on everything above that. But that's not all. The bill would repeal the hated Alternative Minimum Tax (AMT), giving up $840 billion in revenue over the next 10 years. Government would have to get leaner.
The "Taxpayer Choice Act," introduced on Thursday October 11, 2007, is sponsored by three influential junior members. They are headed by Rep. Paul Ryan of Wisconsin, ranking Republican on the Budget Committee, in his fifth term in Congress. But Kemp was also a lone wolf when he introduced his across-the-board tax cut, which became the heart of President Ronald Reagan's economic program.
As his response, House Ways & Means Committee Chairman Charles Rangel yesterday dropped a 500-page-plus bomb on New York, as well as the rest of the nation - a $3.5 trillion tax bill.
The Harlem Democrat calls it "the mother of all tax reform," and it has its merits. But, on balance, it's bad news for the Big Apple.
According to J.D. Foster (the Norman B. Ture senior fellow in fiscal policy at the Heritage Foundation) “Of the bill's many bad provisions, the worst is a new 4 percent surtax on married filers with adjusted gross incomes (AGI) above $200,000 (4.6 percent for even higher income filers). What's with that? Obviously, Chairman Rangel sees the importance of lowering marginal tax rates - hence his cut on the corporate side. So why raise tax rates for married couples, individuals and small businesses? This is serious economic policy schizophrenia.
“Note also that the surtax applies to adjusted gross income (AGI), not taxable income - a backdoor way of phasing down the amount of itemized deductions taxpayers can take. Perhaps Rep. Rangel can explain what he has against charitable contributions, or the deduction for state and local taxes or the home-mortgage deduction.”
The Wall Street Journal is even less impressed with the Rangel plan, “All of this is done in the name of tax "fairness," but it's hard to see how this would make the U.S. code more equitable. Millions of those who'd receive the tax credits already pay no income tax, so they would merely be getting another government subsidy. The group that gets slammed hardest is the entrepreneurial class. Tax Foundation data show that three of four taxpayers in the highest income tax bracket are small business owners or farmers. If Mr. Rangel's plan ever becomes law, look for millions of Americans and small-businesses to "incorporate" themselves so they can pay the lower corporate rate. Previous tax reforms have tried to keep the corporate and top income tax rates equal precisely to avoid this kind of tax gaming.
“We sympathize a little with Mr. Rangel, whose bad luck has been to take over his tax chair just when the AMT is becoming the tax that ate the middle-class in the high-tax "blue" states of New York, California and New Jersey. Democrats are desperate to avoid blame for this, even as they've boxed themselves in with their "paygo" promises of the past few years."
As detractors note, “Its beauty is as a signal of Democratic intentions for 2009. Mr. Rangel is showing the world what he wants the tax code to look like if Democrats run the entire government. None of the Presidential candidates will admit this before November 2008, but give Mr. Rangel credit for having the courage of Hillary Clinton's convictions.”
Yes indeed, Charles Rangel has the courage of Hillary Clinton’s and John Edwards’ convictions alright, but that’s easier for him...he isn’t running in 2008.
While the GOP plan would establish a radically simplified, flatter tax for an estimated 90 percent to 95 percent of all income-tax filers, the Democrats plan would mean higher taxes across the board for all working Americans, except those who incorporate.
Under the Taxpayer Choice Act taxpayers presumably would accept this offer: Give up all your current deductions, and your annual earnings up to $100,000 would be taxed at 10 percent, with a 25 percent rate on everything above that. But that's not all. The bill would repeal the hated Alternative Minimum Tax (AMT), giving up $840 billion in revenue over the next 10 years. Government would have to get leaner.
The "Taxpayer Choice Act," introduced on Thursday October 11, 2007, is sponsored by three influential junior members. They are headed by Rep. Paul Ryan of Wisconsin, ranking Republican on the Budget Committee, in his fifth term in Congress. But Kemp was also a lone wolf when he introduced his across-the-board tax cut, which became the heart of President Ronald Reagan's economic program.
As his response, House Ways & Means Committee Chairman Charles Rangel yesterday dropped a 500-page-plus bomb on New York, as well as the rest of the nation - a $3.5 trillion tax bill.
The Harlem Democrat calls it "the mother of all tax reform," and it has its merits. But, on balance, it's bad news for the Big Apple.
According to J.D. Foster (the Norman B. Ture senior fellow in fiscal policy at the Heritage Foundation) “Of the bill's many bad provisions, the worst is a new 4 percent surtax on married filers with adjusted gross incomes (AGI) above $200,000 (4.6 percent for even higher income filers). What's with that? Obviously, Chairman Rangel sees the importance of lowering marginal tax rates - hence his cut on the corporate side. So why raise tax rates for married couples, individuals and small businesses? This is serious economic policy schizophrenia.
“Note also that the surtax applies to adjusted gross income (AGI), not taxable income - a backdoor way of phasing down the amount of itemized deductions taxpayers can take. Perhaps Rep. Rangel can explain what he has against charitable contributions, or the deduction for state and local taxes or the home-mortgage deduction.”
The Wall Street Journal is even less impressed with the Rangel plan, “All of this is done in the name of tax "fairness," but it's hard to see how this would make the U.S. code more equitable. Millions of those who'd receive the tax credits already pay no income tax, so they would merely be getting another government subsidy. The group that gets slammed hardest is the entrepreneurial class. Tax Foundation data show that three of four taxpayers in the highest income tax bracket are small business owners or farmers. If Mr. Rangel's plan ever becomes law, look for millions of Americans and small-businesses to "incorporate" themselves so they can pay the lower corporate rate. Previous tax reforms have tried to keep the corporate and top income tax rates equal precisely to avoid this kind of tax gaming.
“We sympathize a little with Mr. Rangel, whose bad luck has been to take over his tax chair just when the AMT is becoming the tax that ate the middle-class in the high-tax "blue" states of New York, California and New Jersey. Democrats are desperate to avoid blame for this, even as they've boxed themselves in with their "paygo" promises of the past few years."
As detractors note, “Its beauty is as a signal of Democratic intentions for 2009. Mr. Rangel is showing the world what he wants the tax code to look like if Democrats run the entire government. None of the Presidential candidates will admit this before November 2008, but give Mr. Rangel credit for having the courage of Hillary Clinton's convictions.”
Yes indeed, Charles Rangel has the courage of Hillary Clinton’s and John Edwards’ convictions alright, but that’s easier for him...he isn’t running in 2008.
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