Rangel Prepares Trillion Dollar Tax Bill

The Politico reports that DC’s well-heeled tax lobbyists are scrambling to figure out whose ox Charlie Rangel will gore when he introduces his massive tax bill in the next few weeks:

By now, everyone knows Rep. Charles B. Rangel is poised to introduce the “mother” of all tax reforms, the biggest and most expensive tax code overhaul since 1986. But what they don’t know is how the New York Democrat plans to pay the more than $1 trillion price tag – and that uncertainty is fueling rampant speculation from Capitol Hill to K Street. The classic Washington guessing game is frustrating anxious corporate lobbyists but amusing others, including the House Ways and Means Committee chairman who started it all. “It is surprising how nervous people get when I use the words ‘fairness’ and ‘equity’ to describe our efforts to simplify the tax code and encourage economic investment,” the New York Democrat told Politico.

Rangel is surprised when people get nervous at the words ‘fairness’ and ‘equity,’ but it all depends on the context and the speaker. I get creeped out by the innocuous phrase ‘is it safe?’ And why shouldn’t affected groups be leery of Rangel’s proposal? He’s being cagey about where he’s going to get the money to achieve ‘fairness:’

Rangel called the upcoming omnibus bill “the mother of all reform bills,” saying the cost would be offset by corporate tax loophole closers and other revenue raisers, such as changing the taxation of carried interest. He said that the legislation could include many provisions that broaden the tax base or raise tax rates in order to pay for AMT elimination. Rangel added that he hopes the legislation will be considered by the House by the end of 2007.

People can be forgiven for losing track of exactly how big the federal government is; the figures for spending and taxing are high enough that it’s easy to forget the details. But according to the Congressional Budget Office, the federal government took in $2.568 trillion in revenues in 2007. A tax bill of one trillion dollars represents a pretty big chunk of federal spending. Rangel faces another challenge on the tax issue. His bill is probably dead on arrival in the Senate, where Finance Committee chairman Baucus doesn’t want to take on the challenge of permanently fixing the AMT. Baucus is up for re-election in a solidly red state next year, and the last thing he wants to do is propose a big tax increase. But if the Senate won’t vote on the measure, and Republicans will cast it as the largest tax increase in American history (which it will be), then how many Democrats in tough districts will want to vote on it? After all, 47 House Democrats are currently defending districts that President Bush won twice. Are they likely to be eager to cast a vote for a huge tax increase? Like it or not, it seems that’s where they’re headed.

Related Content