An Interview With Charles Rangel

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L.G.: Sure, but now, obviously, if it's not repealed, in this tax year it's supposed to affect 27 million taxpayers. And what I'm wondering is, what's the lesson of the "law of unintended consequences" in all of this?

C.R.: Oh, come on, I don't give a damn what we did in 1969! I want to know what to do to correct it. With as complicated a tax code as we've got, we're lucky if we get 90 percent of it right. Our ability to recognize where we had it wrong and to amend and to change, you know, that's what we're here for. That's why we have hearings—not because we know everything we should know [but to figure out] what would be the unintended consequences as opposed to what we want to achieve. And so I cannot think of any minor change to the code, much less one this big, that's not going to have unintended consequences.

L.G: Do you think you can enact any of these sorts of reforms if it involves hypothetically raising the top tax rate, raising other tax rates, while Bush is in office?

C.R.: Why can't you use my language?

L.G.: [Laughs] Because you're the chairman and I'm not!

C.R.: Let me tell you, if you were to agree with me that it would be good for the code and the country to close every loophole that we have in the code, you would agree, right?

L.G.: Mr. Chairman, these are hugely technical questions that I have no...

C.R.: Oh, that's crap. Let me tell you, so you would say, "Oh, sure, closing loopholes, you guys are going to do it? I think that would be good."

L.G.: You just pointed out that one man's loophole is another man's incentive.

C.R.: Exactly. Then my next question would've been, "What justification would you give in raising the taxes of every one of the people that's enjoying the loophole?" And so if I'm honest enough to tell you that rates have to be changed in order to accomplish the elimination of the Alternative Minimum Tax, no matter how you frame the question, some people are going to pay more taxes, and most people are going to pay less taxes. And you can ask the question all kinds of ways. "Who in the hell's going to pay more and who's going to pay less?" That's why we had the hearings. Those that would enjoy the elimination of Alternative Minimum Tax pay less, those that enjoy the expanded child-credit pay less, those who would have a larger family pay less, those that enjoy earning pay less. Well, who in the hell is going to pay more? Those who enjoy loopholes or what appear to be unfair advantages in terms of rates are going to pay more. Well, who are these people? That's why we have the hearings. How much money are you going to raise? As much as it takes to have equitable tax cuts, and A.M.T. is one of the major needs for revenues, period.

You come in with a cockamamie question about the economy booming, people are getting more money. I say they're busting their ass every day. They don't know it's booming. They're paying high dollars for babysitters, they're struggling, they're trying to make their mortgage, and you say "But you're doing so well." But I'm the A.M.T. guy, remember me? "I'm a fireman, I'm a teacher, do you really think I'm doing well?" And I say, well, if I took all of you and enlarged the amount of disposable income, would you use it wisely? "You bet your ass I would use it wisely!" And I'm relying on the math that's involved, 90 million people receiving less tax liability. But can it backfire?
 
L.G.: That's my question.

C.R.: I have no clue, except those people on top would have to be far more powerful than I thought they were—and maybe they are.

L.G.: So with you it all starts with eliminating the A.M.T.?

C.R.: Yes.

L.G.: But do you think this can be enacted in a Bush administration where you don't have a veto-proof Congress?

C.R.: Well, I have kept the leadership of my party informed as we have put the pieces together in this tax-reform bill, and there's not a week, whether we're talking about the health-insurance or energy bill, that we don't talk about tax reform. So the real question is, how can I possibly get a bill like this on the agenda? Well, in order to do that, a couple of things have to happen. One, I have to be able to at least prove that I have the overwhelming support of the Democrats. Hopefully, I can prove that I have some Republican support. And, lastly, I have to tell the administration that we stand some type of a chance in the Senate, because I'm so close to the forest, I cannot see how—Bush or no Bush—people can turn down a tax cut for 90 million people when we talk about 800,000 that are the beneficiaries of the Bush tax cut. And I go around and I ask people on the floor.

L.G.: Where are you getting the 800,000 figure?

C.R.: From the Bush tax cuts. The beneficiaries of the Bush tax cuts is probably less than a million.

L.G.: Less than a million taxpayers?

C.R.: Yeah.

L.G.: I just want to know where I should go for my proper information—presumably not the Wall Street Journal editorials.

C.R.: I don't care what number you come up with, it ain't going to be 90 million! And I don't go to those people that may have a rate increase—I don't know them. They don't come to see me. They don't like me! They don't say, "Please don't change the rates!"

L.G.: Well, I bet they do now.

C.R.: No, no, no! You'd be surprised about those who receive the benefits of the reduced tax rates. We hear more from the administration in terms of what they're doing to improve the economy than we hear from them. I mean, this is different if you talk about hedge fund operators or something like that. But no, as it relates to ordinary income rates, no. But corporate rates? Because we hear something from [Treasury Secretary Henry] Paulson about reducing them and closing corporate loopholes.

We expect to have a caucus of the Democrats and Republicans with Mr. Paulson, we're wide open to any ideas he would have, and you remember, he's talking about corporate tax increases. He wants to reduce the overall rates, and so I have to listen because they have to admit, if you reform in closing loopholes politically, you can be charged with increasing taxes. So if we can get the politics out of it and just deal with reform, there may be an area that the administration and committee may be able to work together.

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