Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

The champion of AMT relief

Charlie Rangel has a plan to end the tax pain. Now he just has to convince the Prez. Interview by Money Magazine's Janice Revell

Subscribe to Personal Finance
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)
By Janice Revell, Money Magazine senior writer

No one likes the AMT. Not Democrats. Not Republicans. Charlie Rangel says he can end it once and for all.

(Money Magazine) -- Ever been zapped by the alternative minimum tax? You're hardly alone. This parallel tax system, originally designed to prevent the ultrawealthy from dodging taxes, will ensnare 4 million filers this spring, few of whom consider themselves rich.

It won't be a worry anymore if Rep. Charles Rangel (D-N.Y.) has his way. The head of the House Ways and Means Committee recently introduced what he calls the "mother of all tax reforms," a bill that would forever eliminate the AMT.

President Bush has threatened to veto it; still, the bill offers insight into how the issue might be fixed if the Dems gain control of the White House in November.

Question: Democrats and Republicans alike hate the AMT. Why can't you agree on a plan to kill it?

A. The AMT will bring in close to $1 trillion in the next 10 years. We'd have to raise that elsewhere or cut programs.

Question: There's always a year-end scramble to "patch" the AMT. How is this different?

A. Every year, that patch [which raises AMT exemption, keeping 16 million filers from paying the tax] costs the government billions of dollars and we just borrow more to make it up. Under my plan, we would not borrow money to pay for tax relief, period.

Question: So how would we pay for it?

A. A maximum 1.6 million people would receive an increase in taxes, mostly couples making more than $500,000 [who'd pay a 4.6 percent surtax on income]. People making $200,000 to $500,000 would pay a 4 percent surtax, but the majority would end up paying less than under the AMT. My bill would also end the 15 percent tax rate on carried interest enjoyed by private equity and hedge fund managers.

Question: Critics call your plan the "mother of all tax hikes."

A. The surtax is modest relative to the dramatic pay some of these people get. The upper middle class, meanwhile, is caught in the jaws of an unfair AMT. Under my plan, most of your readers will see a cut in taxes. You can put out a special edition for billionaire readers that says, "Sorry, you didn't make the cut!"

Question: But doesn't Bush plan to veto your proposal?

A. I'm optimistic that we can meet with the administration this year and overhaul the system. Those who have criticized my plan should contribute ideas so we can move the discussion forward.  To top of page

Send feedback to Money Magazine
Photo Galleries
Banned! 10 things you won't find in China China says it wants to open its economy more to the rest of the world, but Beijing keeps a tight grip on technology and access to media. These 10 items are still off limits. More
A morning at the AltSchool, an education startup that Silicon Valley is crazy about The AltSchool is a system of "micro schools" and an education software maker that has raised about $133 million from investors like Andreessen Horowitz and Mark Zuckerberg and Priscilla Chan's philanthropic fund. More
Coolest cars for $18,000 These are the best budget cars, according to the experts at Kelley Blue Book. More