Democrat Charles Rangel proposes elimination of the alternative minimum tax and an overhaul of corporate taxes, pitting businesses against one anotherIt's being called the "Mother of All Tax Bills" on Capitol Hill, and it might just set off the mother of all battles within the business community next year. House Ways & Means Committee Chairman Charles Rangel (D-N.Y.) unveiled a long-awaited tax proposal on the morning of Oct. 25 that featured a two-pronged assault on the tax code. For companies, Rangel's plan would lower the top corporate tax rate from 35% to 30.5%. And for individuals, Rangel's plan would eliminate the alternative minimum tax (AMT), a levy that was put in place decades ago to make sure the wealthy paid their fair share of taxes but now impacts many workers in the upper middle class.
Together, the two proposals would cost more than $1 trillion, which under House rules Rangel must pay for by raising taxes in other areas. "It has been more than 21 years since Congress and the Administration rolled up their sleeves to discuss tax reform, and during that time the tax code has become a jumbled mess of outdated and inequitable provisions that cry out for simplification," Rangel says.
The corporate rate cut is likely to spark the biggest business fight. That's because in order to cut the overall rate, Rangel has targeted three massive corporate tax preferences for elimination. Under the plan, some companies who benefit the most from those will end up paying higher taxes, while the rest of Corporate America will pay less. "This plan will split the business community all asunder," says one person familiar with the drafting of the proposal.
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