Mother of all tax hikes

You knew when Charlie Rangle was named the chairman of the House Ways and Means Committee that Tax hikes were just a matter of time.

From Politico 

Responding to months of speculation in tax land, House Ways and Means Chairman Charles B. Rangel (D-N.Y.) said Wednesday he’ll introduce two separate tax bills – a one-year patch of the alternative minimum tax and his infamous “mother of all tax reforms.”

Rangel said he may introduce both as early as next week. “We must do a stop-gap to make certain we don’t hold things hostage while we wait for the big bill,” he said. “I can’t leave the tax payers not knowing.”

The temporary stop-gap bill will spare as many as 24 million Americans, including some with middle-class incomes, from the alternative minimum tax. Current House pay-go rules say that the $65 billion bill must be offset with tax increases and other types of revenue raisers.

“We’ll pay for it with great difficulty,” said Rangel, refusing to suggest any specific measures. “It’s going to be politically painful.”

If these tax hikes become law it is likely the result will be reduced economic growth possibly even a recession. The more the Government takes in taxes the less that is available for capital investment… This capital investment is what fuels the strongest economy on the planet… well strongest for now anyway.

At a minimum we are looking at a $65 Billion tax increase this year… and well over a Trillion in future years as Rangle tries to replace revenues from the Alternative Minimum Tax.

Interestingly enough the The AMT was intended to target 155 high-income households that had been eligible for so many tax benefits that they owed little or no income tax under the tax code of the time.  The conclusion of a 2004 Congressional Budget Office Brief on the AMT states:

Over the coming decade, a growing number of taxpayers will become liable for the AMT. In 2010, if nothing is changed, one in five taxpayers will have AMT liability and nearly every married taxpayer with income between $100,000 and $500,000 will owe the alternative tax. Rather than affecting only high-income taxpayers who would otherwise pay no tax, the AMT has extended its reach to many upper-middle-income households.

The AMT has gone well beyond its stated purpose of preventing extremely high income households from paying little or no tax to soon encompassing 20% of all taxpayers.  Rangle’s Tax Reform begins with the presumption that he must replace the revenues from a tax that was never intended for government coffers to begin with. 

Until Congress can demonstrate a little spending restraint, and until the President can exercise that Veto Pen a little more often, a Tax Hike is the last thing that should be considered.

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  1. Dean

    “The more the Government takes in taxes the less that is available for capital investment… This capital investment is what fuels the strongest economy on the planet”

    It’s amazing how many people ignore this fact.

  2. gregdn

    So Dean, why don’t we reduce taxes to zero and free up all that capital? Seriously, I don’t like taxes but I like deficits even less.

  3. Dean

    I never said anything about killing all taxes, I’m just suggesting that tax increases should not be the go-to solution for every monetary issue.

  4. allen

    The federal government is so far out of its teritorial waters with the current tax and spend and regulatory actions it undertakes that any new taxes are nothing but a drain on the Economy.

    The Federal budget should pay for the lawmakers, federal police, CIA, FBI, Military, overseeing a federal monetary system. If that was what they actually did, our taxes would be about 10% accross the board and our economy would have 20% more currency being productive creating jobs and a better way of life.

    Instead, we spend an extra 8% on SS, 4% on Medicaid, .5% on Education (which seems to just make our kids dumber and definately more liberal), and 5% other misc B.S.

    Americans are not really being served by their government so much as the Government is sucking the life out of its citizens in this country. I love America, but our political situation is getting worse and worse every election. It is about time that the government starts to give the power that it STOLE and SWINDLED from the voter. I think it is time we abolish the House of representatives and replace it with popular vote.

    I think it is time that there is a constitutional Amendment in which all spending and spending programs must first be voted on seperately, one line, one vote and all spending and spending programs will have end dates, not to be extended beyond with out an additional vote. Once again, done by popular vote, not (Un)Representatives.

  5. tantheblackhearted

    Well said, Allen.

    And Greg remember one thing-you can’t tax your constituents into prosperity.

    If you do not like deficits voice it to those that purportedly represent you and tell them to stop the PORK!

  6. MG

    “Rangle’s Tax Reform begins with the presumption that he must replace the revenues from a tax that was never intended for government coffers to begin with.”

    That almost slipped by me when I first read the post. The tax WAS meant for government coffers – the money was just supposed to come from the upper income earners rather than the middle-income earners.

    Rangle wants to eliminate the AMT and I’m all for that – I’ve paid AMT for the last 10 years, but I sure as heck am not in the top 10% income bracket for the nation. Should he be replacing my former AMT taxes with something else? I don’t think so, I think some government cuts would go a lot farther. But, should they replace the taxes from the wealthy who would ALSO no longer be paying AMT? Yes, absolutely.

    I find nothing wrong with increasing the taxes on the extremely rich while decreasing them for the middle and lower classes. That’s what the AMT was for in the first place.

    Heck, since we’re on the topic… let’s eliminate ALL income tax except for the very wealthy – because THAT is how the income tax came to be in the first place.

  7. Tex

    Our current government solution to fixing the deficits is to raise taxes. Never do they start from where “we the people” always start, cut spending. Taxpayers can’t go and “steal” (taxes are legal stealing) more income on the checks, they have to first cut spending to balance their books.

    Somehow our elected officials believe they don’t have to follow that simple principle. Of course, the first block of people they go to is “the rich”, mostly because their collective votes add up to far less than 1% of most dead people that voted in the last election 😀

    Of course, none of this will *ever* change until we stop re-electing the same idiots back into office each election. Re-election rates are in the mid-90s…once you get in office, you are almost assured to stay there as long as you want. So why do anything that makes a positive impact? Just collect your bribe…oops, PAC money and rubber stamp what the majority wants.

  1. 1 The Largest Tax Hike Proposal in the History of the US « Morning Coffee

    […] Previous Post: Mother of all tax hikes […]




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