Quoting from the Wall Street Journal’s editorial page at length because the Journal will provide intellectual focus/positioning for the opposition to Rangel’s plan: “Trillion-Dollar Baby — Charlie Rangel’s very revealing tax increase“:
You can’t say Charlie Rangel lacks for ambition. The House Ways and Means Chairman has been saying he wants to pass “the mother of all tax reforms,” and even that doesn’t do justice to the trillion-dollar tax baby he delivered unto Washington yesterday.
No one thinks his plan has a chance of becoming law this year, but its beauty is as a signal of Democratic intentions for 2009. In proposing what would be the largest tax increase in history, Mr. Rangel is showing the world what he wants the tax code to look like if Democrats run the entire government. None of the Presidential candidates will admit this before November 2008, but give Mr. Rangel credit for having the courage of Hillary Clinton’s convictions.
The New Yorker is wily enough to realize he has to wrap this homely child in the ribbon of “tax reform,” and yesterday he even invoked the memory of Ronald Reagan’s 1986 reform success. If only the Gipper were still here to have fun with that one. Readers of a certain age might recall that the 1986 reform traded lower tax rates (a top rate of 28%) for fewer loopholes and deductions. Mr. Rangel’s idea of reform is to raise tax rates in order to offer more deductions.
With one very revealing exception. Mr. Rangel does propose to cut the corporate tax rate, of all things, to 30.5% from 35% today. He’d “pay” for this by reducing business credits and deductions. This is revealing because it is a tacit admission that tax rates really do matter to investment choices.
A tacit admission? We’d say it’s an explicit one. Here’s a paragraph from Rangel’s news release:
The Tax Reduction and Reform Act of 2007 also includes a significant reduction in the top corporate marginal tax rate to help American companies remain competitive internationally. The bill proposes a reduction in the rate to 30.5% from the current 35% level.
But compared to our competitors, is it enough?
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