NTU Pans Rangel's Grand Tax Plan

by Mike Godfrey, Tax-News.com, New York

30 October 2007

The "mother of all reforms" unveiled last week by House Ways and Means Committee Chairman Charles Rangel (D-NY) really raises the tax burden on hard-working households and small businesses, according to the nonpartisan National Taxpayers Union (NTU), and will do nothing but rankle taxpayers.

Rangel announced on Thursday that his Tax Reduction and Reform Act of 2007 would be the most comprehensive reform of the US tax code since the Tax Reform Act of 1986, and would provide tax relief to more than 90 million working families through a permanent repeal of the individual alternative minimum tax (AMT), enhancement of other tax benefits, and a cut in the headline US corporate tax rate by almost 5%.

NTU Vice President for Policy & Communications Pete Sepp offered the following assessment of Rangel's plan: "Forget about the World Series for just a moment -- Chairman Rangel's tax plan has to be the biggest bean-ball ever thrown. Not only does it travel far and wide from the tax reform Americans had hoped for, but more taxpayers will wind up taking their lumps than initially advertised. Rangel's plan isn't just robbing Peter to pay Paul - it's robbing Peter and Paul while convincing both of them that the other guy is the one paying the higher taxes.

"For instance, Rangel would get rid of the Alternative Minimum Tax (AMT) - an ill-conceived plan that never should have been established in the first place - but effectively resurrects it under a different name on the tax bills of millions of Americans. He boosts the standard deduction, only to erode the benefits of other common deductions. Families who would qualify as upper-middle-class in many metro areas would see their tax rates go as high as 44 percent, compared to the 35 percent or less they're now paying.

"He would let small businesses continue to take tax-favorable expensing, but then force some of them to shoulder higher self-employment taxes. He would cut the corporate tax rate to make the United States more competitive abroad, but would take away the sensible tax rules that even other countries allow for their own home-grown companies.

"Rangel claims that '91 million families' will benefit from the scheme, but that includes a spending giveaway to millions receiving the 'Earned Income Credit' - households that don't pay taxes anyway.

"The reality is simple: Eventually, all taxpayers will suffer if this so-called tax reform act becomes law, because on balance it is likely to extract more money from our economy and small businesses. That means fewer jobs, less income growth, and bigger government. This plan fails to take a swing at making the Tax Code fairer, simpler, and less burdensome. Three strikes and you're out, Mr. Chairman."

The 362,000-member National Taxpayers Union is a non-profit citizen organization founded in 1969 to work for lower taxes and smaller government at all levels.

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