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Rangel advocates cooperation on corporate tax reform |
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By Jessica Holzer
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Posted: 12/20/07 04:13 PM [ET] |
House Ways and Means Committee Chairman Charles Rangel (D-N.Y.) on Thursday reiterated his desire to cut a deal with the Bush administration on corporate tax reform after the Treasury Department unveiled a long-awaited report on strategies to overhaul the country’s business tax system.
“The American people expect the executive branch to work with Congress to reform our complicated and ineffective tax code, and I believe we can reach some type of agreement on this critical issue,” Rangel said in a statement.
He added, “There is no question that [Treasury Secretary Henry] Paulson’s thoughts on corporate tax reform are very similar to mine.”
The Treasury study, which was commissioned in June and released on Thursday, does not make specific proposals for changing the business tax system. Rather, it outlines three broad approaches for tackling reform, including switching to a form of value-added tax that the Treasury refers to as a “business activity tax,” or BAT.
The Treasury said that replacing the current tax system with a BAT could grow the U.S. economy by as much as 2.5 percent.
Another approach would be to broaden the tax base by eliminating tax breaks and credits in order to lower the overall corporate rate, the study said. Finally, policymakers could target specific areas of the tax code for reform, it concluded.
The Treasury on Thursday insisted that the report did not contain specific proposals. “There are no policy recommendations in this study. We believe it will provide significant substance for discussion, and will further the effort to inform the public policy debate,” Paulson’s top adviser on tax matters, Eric Solomon, said in a statement.
However, the odds are not high for the Democratic Congress and the Bush administration to strike a deal on tax reform.
Rangel earlier this year offered his support for lowering the corporate tax rate in return for the administration’s backing of a plan for repealing the Alternative Minimum Tax (AMT) while keeping the overall level of tax revenues flowing to the federal government unchanged. Abolishing the AMT would drain as much as $800 billion in revenues from the Treasury over 10 years.
Rangel’s overture fell flat when the administration balked at his approach for reforming the tax code, which the New York Democrat unveiled in legislative form this fall.
Aside from repealing the AMT and lowering the corporate tax rate, Rangel proposed raising the standard deduction and expanding the child and earned income tax credits. His legislation also included provisions to pay for the full cost of the relief by abolishing various business tax breaks and imposing a tax surcharge on wealthy families — proposals that prompted criticism from the Bush administration.
Rangel called the legislation a starting point for a discussion on tax reform, saying he would tackle the issue again next year.
While Rangel signaled on Thursday that he was still eager to work with the Bush administration, he also suggested that he would continue to push for measures that he believes will remedy injustices in the tax code but that the administration opposes.
“Some folks have to work two jobs and they still cannot keep up with the rising cost of living in America, while some of the richest individuals in our nation continue to receive lucrative, unjustified tax breaks,” he said.
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