That's how House Ways and Means Committee Chairman Charles Rangel described his planned proposal to overhaul the tax code.
The measure, said the New York Democrat, will be the most sweeping tax reform since the historic 1986 tax act. Rangel's measure is expected to call for repeal of the alternative minimum tax, reduce payments for as many as 90 million U.S. households and increase levies on hedge-fund and private-equity executives. In addition, the Representative told reporters, it will produce a "real simplified, fairer system."
W&M staff are still working out details, but the legislation is likely to include expanded child tax and earned income tax credits, as well as a bump in the standard deduction so that even more taxpayers could claim it instead of itemizing.
Figuring the cost: Staff also are doing the math. First, they are counting heads, trying to gauge just how many of Rangel's colleagues will support such a wide-ranging measure.
Key to that support is the number crunching on how to pay for the changes. That financial detail is critical, especially when it comes to the AMT.
For the last several years, Congress has enacted stopgap legislation to limit the AMT's added tax bite to only around 4 million households. Without such annual action, which takes into account the inflation factor ignored in the original 1969 law, as many as 23 million households would end up paying more each April.
The flip side of the cost to taxpayers is the cost to the U.S. Treasury. As Len Burman, director of the Tax Policy Center, noted in his testimony before the tax-writing panel last week, "The only plausible defense for the AMT is that it is potentially a great revenue raiser."
The goal, indeed the holy grail of all tax bills, is that the legislation be "revenue neutral." That's where the talk of closing loopholes to make up the lost government money comes into play. When come to the AMT, we're talking major moolah.
If the AMT is repealed, some estimate it would cost federal coffers $872 billion over 11 years. Others, including various D.C. think tanks, say the number could be as high as $5 trillion over the next 10 years. A Brookings Institution study found that by 2008, it would be more cost-effective, from a budget standpoint, to zero out the regular income tax code and use instead AMT system.
Political possibilities: While some Capitol Hill watchers say Rangel's proposal has a decent chance of making it through the House, they expect it to have a tougher time in the Senate.
And there is, of course, 1600 Pennsylvania Avenue. Any measure that contains any tax increase is likely to make Dubya pull out his rarely used veto pen.
Tax yada, yada, yada: Rangel's remarks to the press were in conjunction with a Ways and Means Committee hearing last week on "Fair and Equitable Tax Policy for America’s Working Families."
You can read Rangel's post-hearing statement, as well as peruse the written testimony submitted by hearing panelists.
For even more on Rangel's tax proposal and various reactions to it, check out these reports from:
Robert J. Ransom, Jr. - ChFC
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