I have tremendous respect for House Ways and Means chairman Charlie Rangel. And I take my hat off and give him a lot of credit for what he’s done in a tough political environment. He’s done what he can and his heart is in the right place on all this. That said, while it seems to me that he wants to recreate a sort of 1986 Reagan/Rostenkowski tax-reform moment, I’m not sure he’s going to get there.
We suspect Kudlow’s position is shared widely among the business crowd: Bottom line, this looks like a major tax increase, but Rangel is engaging the issue in a serious manner, demonstrating leadership (as he has been doing in advocating free trade agreements).
Kudlow’s summary is worth reading in its entirety, but this argument also resonates, especially his coments on competitiveness.
Mr. Rangel talks about raising taxes on a million people and giving everybody else a tax break. But technically, if you exempt someone from the alternative minimum tax, that’s really not a tax cut since the AMT wasn’t supposed to hit them in the first place.
And he doesn’t deal with the impact on small businesses. Small businesses add serious firepower to our economy. They are our biggest job creators. So going from 35 percent to 44 would be rather punitive.
Another problem I have with this plan is the issue of competitiveness. Look, foreign countries are in fierce competition with us. If we head in the wrong direction on taxes, we’re going to risk serious movement of capital and investment away from the United States.
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