Rangel wants to lower business tax rate

Charles Rangel, the New York Democrat who chairs the Ways and Means Committee, has given his colleagues across the aisle something the ponder.

Rangel, often characterized by the GOP as overly liberal and anti-business, says he wants to reduce the corporate tax rate to 28 percent.

What's up with the political world? First Barack Obama gets elected after being tagged a Socialist by his opponent. Then the Democrats add to their majorities in the House and Senate. Now Charlie Rangel is business' best friend?

Yep, it's a strange new world in Washington, D.C.

Business tax shift: In an interview with Bloomberg Television's "Money and Politics" and reported by Bloomberg.com, Rangel said he's revising the "mother of all tax reform'' he unveiled in September 2007 (and blogged here) to incorporate the business rate change.

Currently, corporations pay a federal rate of 30.5 percent. When state taxes are factored in, American companies pay about 39 percent, a marginal rate that the U.S. Treasury Department has said is second only to Japan.

Rangel's new empathy for companies also was sparked by his desire to more closely follow the President-elect's agenda. Obama's tax plan includes business deductions, credits, and other adjustments that he says will make companies' effective tax rate much lower.

"We can dramatically cut corporate taxes by cutting out the fat out of those industries that have taken an unfair advantage of the tax code," Rangel told Bloomberg.

Other blogosphere reactions to Rangel's change of heart come from:

• The Tax Lawyer’s Blog, Ways & Means Chairman Charlie Rangel Wants to Reduce Corporate Tax Rate to 28%

• Start Marking Sense, Rangel corporate rate cut proposal

• TaxProf Blog, Rangel to Push for 28% Corporate Tax Rate

• Real Clear Markets, Rangel Faces Up to Economic Reality

• The View from Alexandria, Rangel on Taxes

• Dean's World, Rangel endorses corporate income tax reform

• Narcissistic Views on News/Politics, Fools, Charles Rangel ain't cutting your taxes

Previous biz tax battle: As any follower of political campaigns and tax policy knows, the fight over whether businesses get too many tax benefits or pay too much has been going on for, well, seemingly forever.

Just this summer, data was being tossed about, and blogged here, as to corporate tax breaks and burdens.

On one side we had a Government Accountability Office study that found that two-thirds of both American companies and foreign companies doing business in the United States avoided all federal income tax obligations.

Then came the Tax Foundation, a nonpartisan tax policy research organization, offering its own analysis and calling attention to what it says is an overly-high U.S. corporate tax rate.

And in today's Tax Analysts, Jeremy A. Leonard, an economic consultant with the Manufacturers Alliance/MAPI, takes A Closer Look at the U.S. Corporate Tax Burden. In the article (subscription required), Leonard examines corporate tax rates and encourages the introduction of a proposal that focuses less on base broadening and more on reducing statutory rates to stimulate overall economic growth and make U.S. manufacturers more competitive.

Yep, this topic is not going away any time soon. The battle royale will commence between economists, accountants, corporations, lobbyists, professional and trade associations and politicians as soon as the 111th Congress convenes next year. Pick your side now!