Rangel pitches tax 'relief'

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The Democrats' top tax-writer yesterday introduced a massive plan to give tax relief to 90 million working families, a long-anticipated tax-code overhaul that Republicans criticized as the largest proposed tax increase in U.S. history.

The bill would expand income-tax breaks for the middle class while limiting deductions and adding taxes on high-end earners, increase the tax rate on "carried interest" fund managers earn on investments, and cut corporate tax rates. The Democratic plan also would repeal the alternative minimum tax (AMT), because it is set to penalize middle-income families this year.

House Ways and Means Committee Chairman Charles B. Rangel, New York Democrat, said the changes would provide Americans a "greater sense of equity and fairness" about the tax system.

"For too long, hardworking families have struggled to keep pace with the rising cost of living in America," he said. "This legislation would put money back in their pockets to combat the growing economic insecurity gripping our nation."

Republicans say the rewrite of the tax code, which Mr. Rangel touts as the "mother of all tax reforms," would raise taxes $1.3 trillion by itself or more than $2 trillion when coupled with Democrats' plan to let expire President Bush's 2001 and 2003 tax cuts.

House Minority Leader John A. Boehner said the bill couldn't come at a worse time — amid a slowing economy and a mortgage lending crisis — and threatened to reverse five years of gains from Republican tax cuts that reaped job growth, rising household incomes and increased federal tax revenue.

"Imposing higher taxes at this time will doom our economy, put people out of work and cost the federal government revenue that is badly needed if we are in fact going to balance the budget," the Ohio Republican said.

The legislation, titled the Tax Reduction and Reform Act of 2007, would be the largest overhaul of the tax code since 1986.

Mr. Rangel doesn't plan to take up the bill in committee until next year, setting the stage for a grueling election-year tax debate.

House Speaker Nancy Pelosi, California Democrat, said the bill did not yet have the backing of the caucus but was in keeping with the party's vision of tax reform, which she said is focused on "middle-class tax cuts."