Charles in Charge of Your Days and Your Taxes

Rep. Charles B. Rangel, Chairman of the House Ways and Means Committee, is working hard as America's top tax code author. Last week Rangel proposed what would be the largest tax code reform in two decades, the Tax Reduction and Reform Act of 2007.

The proposal, which Rep. Rangel calls ‘the mother of all tax reforms,' would eliminate the Alternative Minimum Tax (AMT), increase the standard deduction, increase the refund on the child tax credit, and would allow Bush’s tax breaks for the wealthy to expire. As stated in the text of the legislation, the goal of the proposal is to provide tax relief for roughly 91 million families.

To pay for Rep. Rangel’s tax plan the proposal includes a surtax of 4% on individuals with annual incomes over $200,000 and a 4.6% tax on families that makes $500,000 annually. The new surtax would bring in over $83 billion a year which would more than cover the cost of repealing the AMT, which brings in just under $80 billion annually.

Republicans have been quick to oppose Rep. Rangel’s bill and the proposed surtax is the primary focus of much of their opposition. Rep. Jim McCrery of Louisiana, ranking Republican on the Ways and Means Committee, claims the surtax will adversely affect small business owners and farmers. Republican Presidential hopeful Mitt Romney calls the proposal “the largest tax increase in American history”.

With election season pressures rising, many Democrats have nuanced some distance from the proposal. Speaker Nancy Pelosi announced that she supported Rep. Rangel’s plan without necessarily endorsing the details of the bill. She added that the principles of the bill are consistent with the Democratic Party, and House Democrats would be presented the bill and have the opportunity to vote on caucus approval.

Presidential hopeful Hillary Clinton also attempted to cordially distance herself from the bill. During the Democratic Presidential Debate on October 30th, Clinton said, “I don’t agree with all the details, but he’s on the right track to say we’ve got to do something about the A.M.T.”

With or without initial partisan support, Rep. Rangel will bring his bill to committee next year and the Tax Reduction and Reform Act of 2007 will surely be a part of the debate during the 2008 general election.