Charlie The Job Killer
Taxes: Charles Rangel, chief of the House Ways and Means Committee, wants to pass the largest income-tax hike ever, to punish the rich. That the middle class and poor would lose millions of jobs goes unmentioned.
Charlie's Floating a Trial Balloon for Hill
'We are not raising taxes" the Democrat from Harlem insisted as he unveiled a plan seeking $1 trillion in new federal revenues in a decade. It includes:
• A 4% income tax surcharge on adjusted gross income over $200,000 for married couples, rising to 4.6% on incomes above $500,000 — which will hit as the Bush tax cuts expire.
• An increase in the capital gains tax rate to 19.6% from 15% for households pulling in over $200,000.
• A more-than-doubling of the tax on private equity firms' carried interest, from the capital gains rate of 15% up to 37.9% — heavily penalizing one of the most effective ways for businesses to restructure themselves and generate jobs.
• $9.4 billion more in Social Security and Medicare taxes for those who file via partnership.
• $4.3 billion in new taxes by requiring the reporting of stock purchase prices to the Internal Revenue Service.
• $20.7 billion in new taxes on mergers and acquisitions via amortization rules changes.
The crafty veteran Harlem lawmaker says it's all worth it to shield the middle class from the ever-expanding Alternative Minimum Tax (AMT) — plus, he's throwing in a cut in the corporate tax. House Speaker Nancy Pelosi has stated she supports the plan.
It would be tempting to accuse Rangel of waging a "Class War" on the rich, but the class who would really get hurt here is the working class, those who are employed by the people Rangel would hurt.
As House Ways and Means ranking Republican Jim McCrery of Louisiana noted, Rangel's plan would be a $3.5 trillion tax increase over 10 years, pushing the top income tax rate to 44%, sixth-highest among industrialized nations and far above the global average of 35.7%.
McCrery says the surtax on AGI will erode the mortgage interest deduction, along with tax breaks on charitable giving, state and local taxes, plus impose a heavy marriage penalty. Most of the 90 million Americans Rangel claims to be benefiting will, according to McCrery, be getting "a purely imaginary 'tax cut.' "
What a time to soak the rich.
Rep. Jim Saxton of New Jersey, ranking Republican on the Joint Economic Committee, reported this month that the top one percent of tax filers now pay more than 39% of all federal income taxes, while the richest 5% pay 60%, and the wealthiest half of taxpayers pay 97%, according to the IRS, all new records.
Revenues are breaking records, too — up by $785 billion since the Bush tax cuts, according to the Congressional Budget Office. The deficit is down to $161 billion, 1.2% of GDP and half the average of the past half-century — thanks to tax cuts producing more than 8 million jobs in the past four years.
Rangel's plan is a nonstarter with George W. Bush in the White House. But in 2009, with a Democrat ensconced in the Oval Office, a nightmare like this could become law.
By INVESTOR'S BUSINESS DAILY | Posted Thursday, October 25, 2007 4:20 PM PT