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Rangel's Tax Plan a Return to Carternomics?

James Pethokoukis at US News & World Report writes that Charlie Rangel's tax plan could actually send tax rates to even higher levels than they were under Carter. He quotes Lawrence Lindsay:

Until very recently, there had been a growing bipartisan consensus, acknowledged at least implicitly, that you cannot run a high-tax [economic] regime and be competitive. The great unspoken fact is that [Rangel's 4.6 percentage-point surtax on high incomes] only looks like a restoration of [Clinton's tax rates]. But if the Bush tax cuts expire, the four-and-a-half points stays on top of the 39.6 [top Clinton tax rate]. So they are taking the rate to 44 percent. Then you add on 1.3 points [for the return of certain limits on tax exemptions], and if you are an entrepreneur another 2.9 points on top of that for the Medicare tax. So we are back to the 50 percent marginal rate under that plan.

James further notes that if the Democrats were to eliminate the income cap on Social Security, as some Dems have suggested, then the highest tax rates would climb to a staggering 60%. I remember what the economy was like during Carter's one term where the highest tax rates were 50% - it was awful. My parents were trying to sell our house, and interest rates were insanely high - at around 18%. That's like buying a house with a credit card. Needless to say, houses didn't move at all back then, and my parents were forced to sell our house via land contract, a very risky move that, thankfully, worked out.


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Comments (17)

Wasnt it CHUCKIE RANGLE who... (Below threshold)
Spurwing Plover:

Wasnt it CHUCKIE RANGLE who called tax cuts racsis?

Ah, the good old days. The... (Below threshold)

Ah, the good old days. They must have been good, right? Carter's got a Nobel Prize, so he must have been a good President, right? Good with the economy, good with international relations, good with energy?

Let's do it all again!

Um, not.

It's an interesting coincid... (Below threshold)
COgirl:

It's an interesting coincidence that you wrote about Rangel and his tax program. I was trying to estimate my 2007 income taxes because some unanticipated tax events have occurred that will necessitate an estimated tax payment.

As expected, we are being hit by the dreaded AMT, however what astounded me is that the exemption amount that is used in the calculation of the tax has actually decreased rather substantially this year and that results in an extra $4500 to $5000 in taxes for anyone subject to AMT.

The AMT is going to snag more and more people in 2007, but for us if this is not changed, you can be darned certain that there's going to be $4500 to $5000 less going into the economy from my family. Why would Rangel's plan have any less of an impact? Answer: IT WON'T. These are the good old days.

Why is it the left believe... (Below threshold)
GianiD:

Why is it the left believes success is luck, thus, they need to punish it by levying more taxes?

You have to wonder what was... (Below threshold)
marc:

You have to wonder what was going thru Rangels mind when he thought this plan up.

Really... there is NO up side to it. The dems running for office all downplay any possibility of higher taxes (their promised programs side) and it's just over 2 months to the first primary.

Not to mention if it got as far as Bush's desk the font on the veto stamp would be larger than the paper it's written on.

Where's the up side Charles?

"Needless to say, houses di... (Below threshold)
nogo war:

"Needless to say, houses didn't move at all back then,"

How long has that house on your block been for sale now?

How long has t... (Below threshold)


How long has that house on your block been for sale now?

Exhibit A in the Democrat argument for sending us back to the Carter years. This type of comment is identified by its short attention span, shorter historic memory and a complete lack of common sense.

Nogo: Actually, si... (Below threshold)

Nogo:

Actually, since you ask, we put our house up for sale late last year and sold it in six months. Right now, it's a buyer's market since there's such a surplus in houses on the market. It's certainly not the interest rates that are preventing people from buying because the rates for a 30 year fixed mortgage are at around 5.89%. Back during the Carter years, it was no one's market. Who can buy or sell a house with 18% interest rate?

Don't worry about Rangel's ... (Below threshold)
hermie:

Don't worry about Rangel's plan. Why only the rich will get soaked.

Of course, that was the reasoning for the AMT.

Also, the definition of 'rich' always changes depending on which audience the Dems are speaking in front of.

Had a friend in the Washint... (Below threshold)

Had a friend in the Washinton DC area in '79 who bought a condo, and she was paying about 19% interest if I recall correctly.

Sigh. Yeah, those were the good times... I can't wait until we're forced into them again by the Dems!

One neat thing about this t... (Below threshold)

One neat thing about this that nobody's really noticed...

If the Bush cuts expire - it's not the Democrat's fault! And then those other increases, well, they're only SMALL ones. The Democrats will have NO idea whatsoever about how the tax rate got so high, and they can deny it's their fault when the economy tanks!

Hey, it's a win-win for them. Tax increases, AND deniability! What's not to like?

Um, assuming you like a hefty recession, that is...

Here's the lie about Democr... (Below threshold)

Here's the lie about Democrat tax policy:

When they soak the rich, they never tell the middle and lower middle class to get a life jacket and a boat until the recession is in full storm. While the rich get wet, who is it that drowns?

Just cause the old asshole ... (Below threshold)
Jesse Jackson:

Just cause the old asshole from Harlem wants to raise taxes does not mean it will happen.

The Thunder Run has linked ... (Below threshold)

The Thunder Run has linked to this post in the - Web Reconnaissance for 10/30/2007 A short recon of what's out there that might draw your attention, updated throughout the day...so check back often.

How about plugging the "car... (Below threshold)
dave:

How about plugging the "carried interest" loophole that lets private equity and hedge fund managers annually avoid billions of dollars in taxes? That's a good idea, is it not?

Thankfully ol' dopey rangle... (Below threshold)
moseby:

Thankfully ol' dopey rangle talks but no one ever takes it seriously. "Send in the clowns...there ought to be clowns....don't bother...they're heeeeeere."

moseby ~ We didn't have to ... (Below threshold)

moseby ~ We didn't have to take his nonsense seriously when he was in the House Minority, but now he is Chairman of the Ways and Means Committee and holds jurisdiction over all revenue bills. Elections matter.

dave ~ The "loophole" of which you speak merely allows hedge fund managers' shares of the gains they generate for their clients to be treated the same as the clients' share. "Plugging" it would cause great economic harm - far beyond the roughly 20% of the $3.8 trillion in "M & A deals" worldwide for which private equity funds now account. Real estate funds operate in much the same way, as do innumerable other business partnerships in a wide range of industries. The implications of eliminating "carried interest" are astounding.

Of course, when people entirely ignorant of economics and the markets see success, it is a natural reaction to hate that success. It's called "envy" and was considered one of the "Seven Deadly Sins" back when people cared about such things.




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