Talking Around Rangel's Big Tax Hike
A big individual income tax hike is being pushed by Democratic Rep. Charlie Rangel, chairman of the House Ways & Means Committee, but economics reporter Edmund Andrews failed to capture the import in a slanted front-page business section story Thursday.
"The House's leading Democratic tax writer will propose a sweeping overhaul of the tax code on Thursday that would increase taxes on many people with incomes above $200,000 but cut them for most others.
"The bill, to be introduced by Representative Charles B. Rangel of New York, chairman of the Ways and Means Committee, would also overhaul corporate taxes by eliminating many major tax breaks and lowering overall tax rates.
"Mr. Rangel has acknowledged that he does not expect to enact such a bill this year, and President Bush would almost certainly veto legislation that raises taxes on the wealthy.
"The plan is probably most important as a preview of what Democrats are likely to pursue after the 2008 elections, especially in rolling back a good part of Mr. Bush's tax cuts for people at the top of the income ladder.
"On individual taxes, the heart of his plan calls for eliminating the alternative minimum tax - which was originally created to prevent millionaires from taking too great advantage of tax breaks but now touches people with upper middle incomes and is poised to affect tens of millions of families with incomes as low as $50,000 a year.
Andrewswas puzzlingly vague about the important specifics of Rangel's proposal - such as, exactly where the tax hike would begin to bite.
"To offset the cost of those reductions, the bill would impose a new 'replacement tax' for the top 10 percent of income earners who would have otherwise had to pay the alternative minimum tax.
"The replacement tax would not apply to couples with incomes as low as $200,000, but aides to Mr. Rangel said many people with incomes as high as $500,000 would still end up with at least slightly lower taxes than under current law."
"Upper-income families, however, would pay for that repeal [of the alternative minimum tax] with a 4% surtax on incomes above $150,000 for a single earner or incomes above $200,000 for a married couple. That surtax would grow to 4.6% for incomes above $500,000."