Rangel's 'Mother of All Tax Reforms'

So Charlie Rangel, chair of the House Ways and Means Committee, has finally gotten around to unveiling his plan to repeal the alternative minimum tax. To pay for an $800 billion (over 10 years) repeal of the AMT, Rangel would slap a 4 percent tax-rate surcharge on adjusted gross incomes over $200,000 for married couples. That surcharge would climb to 4.6 percent for those with income of more than $500,000. And on top of that, households with income of more than $200,000 would have to pay rates as high as 19.6 percent on capital gains and dividends, instead of the current rate of 15 percent. Plus, Rangel would cut corporate income taxes but eliminate certain tax breaks.

My quick take is as follows: As I have been saying, Democrats have been strangely double-counting the supposed revenue gains they assume they will be getting by raising taxes on wealthier Americans. The Rangel bill would effectively roll back a big part of the 2001 and 2003 Bush tax cuts for people with higher incomes—though the bill is silent on the cuts themselves. But that "new" revenue would be the same dough that is also supposed to be used to pay for HillaryCare 2.0 (or other healthcare reform), as well as additional education spending. Does this mean Democrats plan on raising additional taxes? Good question, since the Rangel bill will almost assuredly go nowhere but may shape the battlefield for a big tax fight in 2009. It sure seems possible that if Democrats control the White House and Congress, we might see a rollback of the Bush tax cuts, plus a surtax, plus higher Social Security taxes.