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The Reviews Roll In on the Democrats’ Mother of All Tax Hikes
October 29, 2007
Mayor Bloomberg: Democrat tax hike “will certainly hurt New York” “The Bush tax cuts enacted in 2001 and 2003 … [Rangel] literally banks on those cuts expiring” “That the middle class and poor would lose millions of jobs goes unmentioned” “When asked about the initiative, Speaker Nancy Pelosi said, ‘I certainly support his plan.’”(CQ, 10/26/07) New York Post: “Mayor: Rangel Tax Plan Would $ock Us … the big surprise of the day came from Mayor Bloomberg, who warned that Rangel's revamp of the tax code would harm the city … ‘I don't believe the right answer here is to increase other taxes to pay for that relief,’ [Treasury Secretary Henry] Paulson said. ‘I think if you start raising the top two brackets or having a surcharge, you're going to hit a lot of small businesses.’ The show's host, John Gambling, then turned to Bloomberg and asked, ‘And it affects you, Mr. Mayor, at home?’ ‘Absolutely,’ Bloomberg responded. ‘It will certainly hurt New York.’” (10/27/07) Chattanooga (TN) Times FreePress: “Democrats rush to raise taxes. Everyone has reason to expect Democrats will raise taxes if a Democrat is elected president with Democratic majorities in both houses of Congress in 2008. But this week, Democrats couldn’t wait. They are rushing – now – to raise taxes … But do you think adding a $1.3 trillion tax burden on the most productive people and companies that provide jobs in our national economy is a good idea? … President George W. Bush’s tax cuts for everyone who pays income taxes have stimulated economic growth for general benefits – while bringing in more money for government as the lower rates were applied to a larger economic base. Do we want to reverse that? … Democrats are optimistic they will win the presidency and Congress – and raise taxes. Taxpayers should be pessimistic about a Democratic win because it would impose higher taxes that would depress our current economic growth that is good for all.” (Editorial, 10/27/07)
Bloomberg: “Last week, just in time for the Halloween season, House Ways and Means Committee Chairman Charles Rangel gave American voters a chilling glimpse of what U.S. tax policy will look like if a Democrat wins the White House in 2008. For those of you wondering what the details of taxing the rich to pay for Democratic spending proposals might look like, Rangel, a close ally of Hillary Clinton, has provided a tour of the abyss. If the ‘mother of all reforms,’ as he calls his tax plan, had a name, it would be Mrs. Bates. But, unlike Norman's mother in the Alfred Hitchcock classic ‘Psycho,’ this lady is very much alive. In terms of revenue, Rangel's reform would be the biggest tax increase in history … But the revenue grab isn't the scariest part. That honor belongs to the increase in marginal tax rates, which is almost unfathomable in its scale.” (Op-Ed by Kevin Hassett, 10/29/07)
National Association of Manufacturers: “We are extremely concerned about the tax increases that will impact manufacturers of all sizes. Based on our initial review, for many manufacturers, the proposed tax increases could well exceed the benefits of the proposed tax relief.” (NAM VP Dorothy Coleman, 10/25/07)
National Review Online’s Larry Kudlow: “And he doesn’t deal with the impact on small businesses. Small businesses add serious firepower to our economy. They are our biggest job creators. So going from 35 percent to 44 percent would be rather punitive. Another problem I have with this plan is the issue of competitiveness. Look, foreign countries are in fierce competition with us. If we head in the wrong direction on taxes, we’re going to risk serious movement of capital and investment away from the United States.” (NRO’s The Corner, 10/25/07)
Manhattan Institute’s McMahon: “Billed as providing ‘tax relief’ for ‘hardworking families,’ the Rangel plan would dull the leading edge of economic growth in the metro New York region – with ripple effects on state and local tax revenues to boot. In the long run, taxpayers at every income level would suffer … the surcharge would apply not to ‘taxable’ income but to ‘adjusted gross’ income over the threshold – meaning it would allow no itemized deductions and no tax preference for capital gains and dividends … New York state's all-in tax price (the sum of local, state and federal levies) is already high, amounting to a record 37 percent of personal income. Rangel is seemingly oblivious to the consequences of raising it even higher … The Rangel plan doesn't even deal with the biggest federal tax-policy challenge of all: the impending 2010 ‘sunset’ of the Bush tax cuts enacted in 2001 and 2003. In fact, he literally banks on those cuts expiring to make his plan balance under federal budgetary rules. As a result, in just four more years, the middle-class and the wealthy alike would be hit with massive tax hikes.” (New York Post Op-Ed, 10/29/07)
Heritage Foundation’s Foster: “While the details are still trickling out, the basic roadmap is clear enough. Under the chairman's bill, taxes would increase by about a half-trillion dollars over the next 10 years. Much of that increase would fall on small businesses, especially on small manufacturers. The bottom line: higher taxes, fewer jobs, and lower wages … In addition to the tax hike generally, the Rangel bill includes some terrible provisions … [H]e raises tax rates on individuals and small businesses, indicating a serious condition of economic policy schizophrenia. The Rangel bill also eliminates the deduction introduced in 2004 specifically for manufacturing activities. This provision effectively lowers the tax rate on manufacturers … This provision would be a hammer blow to all the manufacturing companies in America (and their workers) that are not traditional C corporations.” (Heritage Foundation,Hawaii Reporter Op-Ed, 10/28/07)
New York Post: “Charlie Slaps New York … Parse the details of these ‘revenue raisers,’ as Rangel calls them, and it becomes hard not to wonder what New York ever did to deserve such a disservice. Indeed, the bill threatens four critical components to Gotham's economy: Wall Street: Rangel would allow the Bush tax cuts on dividends and capital gains – which have generated billions upon billions for New York's coffers – to expire. Tax rates would jump from 15 percent to as high as 39.6 percent, effectively cutting the Golden Goose's throat … Bottom line: New York filers could find themselves forking over 44 percent of their income to Uncle Sam. Corporations: Trading lower corporate rates – that are still far higher than the overseas competition – for higher personal rates is a net loser. The resulting drop in savings and investment would damage the financial sector – New York's money pump. Small Businesses: Small start-ups are generally owned and operated by individuals who could see their tax rates climb from 35 percent to 44 percent. Forcing small-business owners to pay payroll taxes, as proposed, won't help. New Yorkers, who are hit the hardest, need to work the hardest to kill this bill.” (Editorial, 10/26/07)
Investor’s Business Daily: “Charlie The Job Killer. Taxes: Charles Rangel, chief of the House Ways and Means Committee, wants to pass the largest income-tax hike ever, to punish the rich. That the middle class and poor would lose millions of jobs goes unmentioned … As House Ways and Means ranking Republican Jim McCrery of Louisiana noted, Rangel's plan would be a $3.5 trillion tax increase over 10 years, pushing the top income tax rate to 44%, sixth-highest among industrialized nations and far above the global average of 35.7%. McCrery says the surtax on AGI will erode the mortgage interest deduction, along with tax breaks on charitable giving, state and local taxes, plus impose a heavy marriage penalty. Most of the 90 million Americans Rangel claims to be benefiting will, according to McCrery, be getting "a purely imaginary 'tax cut.’” (Editorial, 10/25/07)
National Review Online: “The bad news is that he has chosen the most economically damaging way possible to compensate for these tax cuts. His plan assumes that most of Bush’s tax cuts will expire and that taxes on capital gains, dividends, estates, and high earners will therefore go up. Then Rangel adds on still more taxes. People making more than $200,000 (or maybe more than $150,000 — the precise number has not been determined) would pay an additional 4 percent tax; people making more than $500,000 would pay 4.6 percent. The top marginal tax rate would thus go from 35 percent to 44.2 percent. It is an anti-growth plan that ought to be stopped.” (Editorial, 10/29/07)
San Francisco Chronicle: “A plan released Thursday … quickly met boos from Republicans and howls from Silicon Valley, even as time is running out this year to prevent the tax from clobbering a wide swath of upper-income taxpayers … To offset the cost of a temporary fix for the alternative minimum tax, Rangel would repeal several corporate tax provisions, including one that allows venture capital firms to pay a 15 percent capital gains tax rate on investment income, rather than at the 35 percent income tax rate. Republicans are pressing Rangel to act on the AMT, while attacking his plans to offset the lost revenue … Silicon Valley venture capitalists – along with every other business that would see its taxes rise under Rangel's plan - are lobbying fiercely against the plan and are trying to separate themselves from hedge funds and private equity firms targeted by Democrats hunting for revenue. ‘If anything is capital gains it's investing for seven to 10 years in a man, an idea and a garage,’ said Mark Heesen, president of the National Venture Capital Association. ‘We invest early in innovative companies, exactly the companies that the U.S. Congress has been saying we need to be competitive ... the Googles, the Genentechs and the eBays.’” (10/26/07)
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