Simplification Is A Productive Start For Reform

January 8, 2007

The new House Ways & Means chairman, Charlie Rangel (D-NY), suggested simplification of the tax code could be on the committee’s agenda. During his appearance on ABC’s “This Week”, Rangel offered this exchange:

GEORGE STEPHANOPOULOS (ABC NEWS): Congressman Rangel, your committee is of course in charge of taxes. And this year 2007, about 23 million Americans are slated to get a tax increase through these alternative minimum tax. You said you promise to fix it but you’ve also promised to pay for it and it’s going to cost about $50 billion this year alone. How can you find that money?

REPRESENTATIVE CHARLES RANGEL: I didn’t promise to fix it. There’s nothing – notwithstanding all the awesome power of the chairman, Democrats can’t do anything alone and we don’t want to. There’s no Democratic way to simplify the tax code or to remove the inequities that exist in it without Republican cooperation. I have every reason to believe that the Republicans want to cooperate. It’s in their best interest to cooperate. It’s good for the Democrats, the Republicans, the Congress and the American people. We have a lot of fat bloated in the tax code, and it costs a trillion dollars over ten years to repeal it. It just seems to me that if the Congress makes up its mind that this is an inequity and if they’re talking about Democrats wanting to increase taxes where this is a trillion dollar tax cut, that we make up our mind probably through simplification of the code to find out what breaks are in that code that are loopholes instead of incentives and to try to find the money.

STEPHANOPOULOS: But to get a trillion dollars over 10 years or $50 billion this year you’re talking about more than simplification. You’re going to have to look at some sacred cows, aren’t you? The state and local tax deduction, the home mortgage deduction?

RANGEL: We have to look at all of the deductions, all of the credits and to come up with what we think we can do. I’ve had discussions with Secretary Paulson about these things, as well as Jim McCrery, the ranking member. Is it going to be difficult? You bet your life. But we have to make up our minds whether we want to be responsible legislators.

We hope so. Already, members of the House are proposing to further complicate the tax code with more deductions and credits.

For more on the problems with tax credits, please see:

New Congress Should Call Truce on Tax Credits
Making the Problem Worse: Credits, Credits, and More Credits
America’s Shrinking Income Tax Base Requires Higher Rates for Everyone

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