U.S. Capitol Building
U.S. Capitol Building - 
Listen To The Story


KAI RYSSDAL: Congressman Charles Rangel has this phrase he likes to use when he's talking about whatever his latest piece of legislation is. It's not his -- he stole it from Saddam Hussein, in fact.

The Democratic chairman of the House Ways and Means Committee introduced what he's calling the "mother of all tax reform bills" today. Rangel's promising to lower taxes for 91 million families -- and, as Marketplace's Steve Henn reports, overhaul the entire tax code to the tune of almost a trillion dollars.

Steve Henn: Rangel says his bill would stick it to rich people and use the money from taxing them more to give everybody else a break -- although those are not exactly his words...

Rep. Charlie Rangel: Taxpayers know best what to do with their money rather than government. We don't believe that you have to be rich in order to know what to do with your money.

But by far the most expensive piece of the puzzle is his plan to wipe out the Alternative Minimum Tax. It was designed years ago for the richest taxpayers -- but this year, it could hit more than 20 million families. Getting rid of it would cost the government about $800 billion over the next 10 years.

But Rangel would increasing tax rates for hedge-fund types, private-equity partners and married couples who make more than a half million dollars a year.

Rep. Jeb Hensarling: What he is really doing is taxing small businesses -- 75 percent of taxpayers at the highest rate are job-producing small businesses.

Republican Congressman Jeb Hensarling is not a fan of the Rangel plan.

Rep. Hensarling: I think it lives up to its billing as the mother of all tax increases.

But Rangel just getting started. He also wants to lower the corporate tax rate, while eliminating half-a-dozen popular loopholes. Wall Street hotshots are ready for a fight, and no one believes this bill will make it into law as long as President Bush is in the White House. But:

Rep. Rangel: I'm willing to work with any president in the next election -- no matter who she is.

So for now, Rangel ideas about tax rates will have to wait. Instead, watch for Congress to pass a temporary one-year fix for the Alternative Minimum Tax soon.

In Washington, I'm Steve Henn for Marketplace.