Thursday, October 25, 2007

Is $200,000 a lot of money?

Here come the Democratic tax hikes.
Oct. 24 (Bloomberg) -- House Ways and Means Committee Chairman Charles Rangel said he would propose paying for curbing the alternative minimum tax this year with a $48 billion tax increase on executives of buyout firms and hedge funds.

The New York Democrat said the proposal would more than double the tax rate on so-called carried interest, the compensation that executives at buyout and venture-capital firms, as well as real estate and oil and gas partnerships, receive for managing investments. It would also require hedge- fund managers to pay tax on income they defer in offshore accounts, he said.

The so-called patch, which lawmakers must pass this year to forestall a tax increase on 21 million households, will set up a showdown between Democrats who want to offset the lost revenue with new levies and Republicans who oppose any increase. The carried-interest measure will also be part of a broader overhaul that contains a permanent repeal of the minimum tax, a tax-rate surcharge on wealthy households and a lower corporate rate.

Rangel, 77, laid out his plans today to the tax-writing Ways and Means Committee. ``I didn't get a lot of responses, though,'' he said. Rangel plans to introduce the broader measure tomorrow and the one-year stopgap bill next week.

After the half-hour meeting, Louisiana Representative Jim McCrery, the ranking Republican on the panel, said he didn't know all the details of Rangel's plan, though had heard enough ``to know that I can't support the bill.''

`Mother of All Reforms'

Rangel said the broader measure, which he has called the ``mother of all reforms,'' would contain a 4 percent tax-rate surcharge on adjusted gross income over $200,000 for married couples. The surcharge would rise to 4.6 percent for those with income of more than $500,000. In addition, households with income of more than $200,000 would have to pay rates as high as 19.6 percent on capital gains and dividends, instead of the current rate of 15 percent.

That provision alone would raise $831.7 billion, more than enough to cover the cost of eliminating the minimum tax, Rangel said.
Dick Morris has more here

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