Republican Congressman Proposes “Rangel Rule” for Taxpayers

January 30, 2009

So news broke today from the Washington Post that former D.C. mayor Marion Barry is yet again in trouble with the IRS. That doesn’t surprise us. But that got us thinking that it is a rather amusing state of affairs in tax policy right now. The current chairman of the Ways and Means Committee (the committee responsible for writing tax law), Charlie Rangel, has tax problems. And as we all know, Obama’s Treasury Secretary, Timothy Geithner, whose department oversees the IRS, has tax issues. These two cases aren’t that important from a tax revenue perspective and may be mere oversights, but these types of cases affect how the public perceives the fairness of the tax system.

Maybe that’s why one politician, John Carter (R-TX) is looking to score political points off this whole state of affairs by proposing what is actually a more humorous than realistic proposal to exempt taxpayers from penalties and interest if they write the words “Rangel Rule” on their 1040. Here’s TaxProf with more:

Congressman John Carter (R-TX) yesterday introduced H.R. 735, The Rangel Rule Act of 2009, which would add new Code § 7529 to prohibit the IRS from charging penalties and interest on back taxes. From the press release:

Under the proposed law, any taxpayer who wrote “Rangel Rule” on their return when paying back taxes would be immune from penalties and interest.

“We must show the American people that Congress is following the same law, and the same legal process as we expect them to follow,” says Carter. “That has not been done in the ongoing case against Chairman Rangel, nor in the instance of our new Treasury Secretary Timothy Geithner. If we don’t hold our highest elected officials to the same standards as regular working folks, we owe it to our constituents to change those standards so everyone is abiding by the same law. Americans believe in blind justice, which shows no favoritism to the wealthy or powerful.”

Carter also said the tax law change will provide good economic stimulus benefits, as it would free many taxpayers from massive debts to the IRS, restoring those funds to the free market to help create jobs.

Here is the text of proposed new § 7529:

Any individual who is a citizen of the United States and who writes ‘Rangel Rule’ on the top of the first page of the return of tax imposed by chapter 1 for any taxable year shall be exempt from any requirement to pay interest, and from any penalty, addition to tax, or additional amount, with respect to such return.

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