An Interview With Charles Rangel

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C.R.: Back up just one step before I catch up with your question. If we don't extend 2010 [President Bush's tax cuts], or don't even consider it, it [eliminating the A.M.T.] is going to be an $800 billion revenue loser. If we do extend the 2010 tax cut, it's going to be doubled. Now comes your question, well if it's going to be a trillion or more, how the hell are you going to pay for it and how does it impact the top rates?

L.G.: Okay.

C.R.: Okay. Well, we know how much it's going to cost. We hear from I.R.S. that there's $340 billion to $350 billion out there uncollected. We also hear politically that it'll be very difficult to collect it, but it's out there. We know that in that tax system, there will be recommendations from Treasury and I.R.S. about what used to be "incentives" that now have become "loopholes" because people have forgotten why they're in the code. So we've been combing through those to see collectively what that would be. I have never looked at the hedge funds or the private-partnership tax rates as a source of revenue, because there could be some explanation as to why there are dramatic differences in the rates between partnerships and corporations. And while I as chairman have not seen it, it is possible that there's revenue there. And as we talk, the Joint Tax Committee is trying to see how much all of these different rates cost—from mortgage interest deductions, charitable deductions, local and state tax deductions, and even adding some, our extenders, which include research and development. At the end of the day, someone's got to say, "You've done a good job in terms of reforming A.M.T., but you still haven't answered the question ‘How in the hell do you intend to pay for it?'" So if I say, "from within the code," then your next question would be, "Then you're not excluding the possible increases in the rates for the higher incomes?" No! No, I'm not excluding anything.

We hope to have a code that will relieve tax liability for 90 million people. If the whole idea is that people know what to do with their money better than government, and if President Bush believes that his tax cuts were so successful because the taxpayer had the wisdom that government doesn't have ... then my present contention is that the middle class is just as smart as higher-income people. Therefore if you enlarge the family deductions, broaden the earned income tax credit, and expand the child credit, get rid of the A.M.T., then you have the same tax cut, except one would be for less than a million people, the other would be for 90 million people.

L.G.: As we sit here now, are you unwilling to say that you're for raising the upper rate?

C.R.: I don't like talking that way.

L.G.: Most people think you are. Most people think most Democrats in Congress are.

C.R.:  You know, I can see how you can reach that conclusion. But I never would think about giving any reporter a quote from me that says "Rangel says he's going to raise the tax rates for the rich." I would never say that. I'm saying that what scares the hell out of so many people, especially those that are in hedge funds, is that I want to be able to say at the end of the day that it's a fair and equitable system that has the confidence of the taxpayers. And they say, "He's coming after us. Goddamn it, that's what Rangel meant!"
 
L.G.: Back in June, on the day that you and Representative Sander Levin [Democrat from Michigan] talked about raising the rates on private equity and hedge fund managers [from the 15-percent capital-gains rate to the 35-percent ordinary income rate], the Dow Jones fell more than 185 points. Now that you're chairman, are you very sensitive that your words have a big market impact?

C.R.: That's one of the reasons why you find it very difficult for me to answer your rifle-shot question. I cannot be more honest. I would have to say, "Hey, I told you when you visited with me, I wanted to be fair and equitable." But I did not say that I could do all of the things that I want for the middle class without taking a look at all of the rates. I've had a Republican agreement to raise billions of dollars in "loophole closings," but you and I know that every "loophole" that's closed is an increase in taxes for someone.

What I have said is that the one thing that Republicans and Democrats agree on the committee is that the Alternative Minimum Tax is obscene, it shouldn't be there, it's immoral, and we should do something about it.
 
L.G.: But in the past, you have voted for various iterations of the Alternative Minimum Tax. And there was a vote in 1999 to repeal it, and you voted to keep it.

C.R.: I guess whenever you do that, you have to find out how you're paying for it and all those other things. And so, you know, when I wasn't chairman, I wasn't thinking like a chairman.

L.G.: That's what I'm getting at.

C.R.: Let me tell you, a lot of my votes have been adjusted because I'm the chairman, because my job is not to just prove to my constituents how I vote as the "Harlem congressman," it's to prove to the leadership of the Democratic Party what our policy is as Democrats in order to persuade the Republicans and the American people that we have the right policy.

L.G.: Is there a lesson here? When the Alternative Minimum Tax was enacted in 1969, two years before you arrived in the House, the idea was that really rich people—

C.R.: One hundred fifty of them!

L.G.: —that's right, were paying no tax whatsoever, so it was something to address.

C.R.: It was an admission that the tax system was screwed up. The way that I remember it, there were 150 people who damn near thought that the government owed them money because of all the deductions and the credits.

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