Tough road for Rangel on tax push

The question is whether anyone will get behind the proposal offered by the embattled chairman of the Ways and Means Committee.


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Democrats’ agenda for 2010 is already crowded with a number of priorities, and the looming election will have leaders carefully selecting what to take up. There’s also the question of the ethics investigations targeting Rangel, which have weakened the chairman of one of Congress’s most powerful panels.

Rangel appears undeterred, and there are many reasons to think 2010 will be a big year for taxes. It has been more than 20 years since the last great tax reform, and the expiration of some of former President George W. Bush’s individual tax cuts could give reform an impetus.

It’s also a priority for the chairman of the House’s tax-writing panel. On Tuesday, Rangel said he’ll press Treasury Secretary Tim Geithner this week to support broad tax reform in 2010.

Rangel told executives at a PricewaterhouseCoopers symposium that he wants to “persuade” Geithner and members of his committee that they would serve Congress and the country better “if we reform the tax system that we have.”

“As a legislator, I can’t think of anything more important for my committee to do,” Rangel said.

The chairman said he has the support of Speaker Nancy Pelosi (D-Calif.), which he said would allow him to “negotiate” certain things with Geithner. He said he’d start his campaign after Congress completes its healthcare debate.

Rangel has authored tax legislation that would have lowered the corporate tax rate. He would pay for that lost revenue by eliminating a number of other tax breaks, including a provision that allows companies to defer taxes on income their subsidiaries overseas earn.

On Monday, Rangel introduced a bill extending several other tax bills and changing the tax rate on the “carried interest” earned by hedge fund managers so that it is taxed as ordinary income instead of capital gains. That would raise the tax from 15 percent to 35 percent or higher, if other tax reforms offered in President Barack Obama’s budget are approved.

Obama has supported some of these proposals, but he has not called for a reduction in the corporate rate and is still awaiting a report from a panel headed by former Federal Reserve Chairman Paul Volcker that is examining the tax system. It is unclear what Obama’s priorities are next year on taxes.

Rangel admitted Tuesday that “it ain’t like it used to be, where you said, ‘This is what I’m going to do’ ” and it gets done.

Bill Archer, the former Republican chairman of Rangel’s committee who is now a senior adviser to PricewaterhouseCoopers, told Rangel he admired his leadership on tax policy, but offered a problem: “I don’t see a lot of followers,” Archer said.

Rangel faces what he described Tuesday as the most partisan climate in Congress he has seen. Obstacles to tax reform next year include a crowded legislative calendar and the struggling economy.

“We’ve got climate control. We’ve got the health bill. We’ve got the war. We’ve got the deficit. We’ve got jobless people. We have to spend money to keep the unemployed able to live. We have to shore up the banks and small businesses so that they have the confidence in order to create the jobs,” Rangel said.

Rewriting the tax code so that it makes better sense “is not a subject matter that the country is going to be screaming for,” he continued. “We have to find a way to package this to get it out.”

Rangel also faces some self-imposed problems.

After 20 terms in Congress, Rangel is politically weakened. The House ethics panel is investigating several controversies swirling around him, including unpaid taxes on a home in the Dominican Republic and his acceptance of several rent-controlled apartments in Harlem.

Republicans and newspapers have called on Pelosi and Democrats to strip Rangel of his chairmanship, and Ways and Means was on the sidelines of the climate change effort in the Senate. Rangel worked on healthcare reform, but a tax increase he included in his bill to pay for some of the reforms was replaced by one offered by Pelosi, whom Rangel said did not discuss the issue with him.

Rangel has always been a cheery and optimistic figure; his autobiography was titled And I Haven’t Had a Bad Day Since.

But The New York Times, citing friends and associates of Rangel’s, wrote last month that the ethics allegations have taken a toll on the Empire State lawmaker. The longtime congressman has noticeably lost weight.

Asked if it was more difficult to get consensus on tax policy in an election year given the partisan environment he’d described, Rangel grew quiet.
“Well, I wouldn’t be helpful, would I, if I said yes?” he said, adding: “I don’t know if I’ve done everything that I can.”

Still, Rangel’s optimism can still shine through.

He describes Rep. Dave Camp (Mich.), his panel’s senior Republican, as a “good guy” and said he’s hopeful that he can win Republican support for a tax bill.

The meeting with Geithner is intended to help.

He said he wants to find out “what will be contentious in terms of party divisions and what would not be so I can honestly talk with Republicans on my committee, because we don’t dislike each other.”

“If we can find consensus and this really looks like something of ‘Why didn’t we do it earlier?,’ we may be able even to get Republicans. That’s a long shot. But if we can get something that the Republicans on the committee think makes sense, then we’re in much better shape.”