NJ Tax Revolution
Federal taxes: Charlie Rangel's "Reform"
[Wall Street Journal links in this post might be for subscribers only.]
Take a look at Charlie Rangel's proposals on tax reform. Here's an article in the Wall Street Journal by Rangel himself. He no doubt thinks his vision is pleasant; he wants to "help restore a sense of equity and fairness that is critical to the success of our voluntary tax system."
I have to laugh when people talk about our "voluntary tax system." Where do I opt out, Charlie?
In fact, taxation isn't voluntary, and his pleasant language masks a simple fact: Rangel wants to extort more money from rich people so that he can avoid extorting it from others. Don't take my word for it: in the same sentence, he says he's going to reach his goals by "reducing windfalls paid out to some of the wealthiest individuals in the nation".
It's good spin, no doubt. Who can argue with reducing windfalls? The term originally meant fruit or wood that was blown down by wind -- a lucky event that gave you goodies for free.
But the "windfall" Rangel wants to reduce includes the income people enjoy when they work hard enough and risk enough and invest enough to have successful businesses. "Tax Foundation data show that three of four taxpayers in the highest income tax bracket are small business owners or farmers.*"
That's not a windfall, Charlie. That's a livelihood. More: it's a livelihood built on sweat and stress and entrepreneurial effort. It's the American Dream, for crying out loud.
This is what passes for fairness, equity, and fiscal responsibility in the Democratic party.
Dick Armey sees right through the smokescreen.
Mr. Rangel's bill increases tax rates by 4% on individuals earning above $150,000 and couples earning over $200,000. This increase will come on top of the rollback of the 2001 and 2003 Bush tax cuts. The combined result: America's top income-tax rate will skyrocket from the current 35% rate to a top rate of 44%. Let's be clear -- that's a 25% tax hike.
Believe it or not, it gets worse. If you drill down a little further, you see that Rangel is a Democrat trying to shift the burden of a Democrat-designed tax system onto non-Democratic states.
He wants to eliminate the Alternative Minimum Tax (AMT). By itself, that's a good thing -- the AMT is a parallel tax system implemented in 1969 by Democrats to make sure that "rich" people wouldn't be able to use loopholes to avoid paying taxes. Of course, a flat tax would do the same thing while avoiding the need for, in Dick Armey's words,
Compliance with the 60,000-page tax code [that] costs Americans seven billion man-hours and over $140 billion in fees to accountants and consultants, all before a single check is cut to the government....but to Democrats like Rangel, fair taxation means unequal taxation, so a flat tax is anathema to them. But I digress.
Yes, eliminating the AMT is a good thing. And it's true that this year, "If lawmakers do nothing, the number of people hit by the AMT will soar to about 25 million for 2007 from about four million for 2006, according to Treasury Department estimates.*" That's a little bit misleading, since every year lawmakers do something: they create a "patch" that prevents too many people from getting hit with the AMT. But everyone agrees that the AMT is becoming a problem for more and more people.
Unfortunately for Democrats, many of those people reside in blue states. Blue-state Democrats already tax at high rates in the states and municipalities, and the AMT doesn't let you deduct state and municipal taxes. Thus, blue states are disproportionally hit by taxes at all level of government. (Note to Americans: if you elect Democrats, you pay a lot of taxes. Don't pretend you weren't warned.)
If Charlie Rangel can eliminate the AMT, then middle-class and wealthy Democrats in blue states will be able to take more deductions. Then, because Rangel is "fiscally responsible", he will make up the shortfall by raising taxes on rich people across the entire country. Shazam, problem solved! Short a billion or two in California and New York because the AMT has been eliminated? Don't worry, those Beverly Hillbillies in Omaha or Texas or Ohio will cough it up.
I shouldn't be surprised at the chutzpah shown by soak-the-rich Democrats. But I am constantly surprised that we keep on electing them.
Labels: federal
posted by Jake Freivald @ 8:09 PM
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