KTN Supporters and friends,

Rep. Charles Rangel, D-NY, the powerful chairman of the house ways and means committee is proposing massive increase in federal taxes. $3.5 trillion is the total.

Don't worry it is only on the "rich". Ha ha. The ranking GOP member of ways and means calls it, "the mother of all tax hikes," but we don't have a female president....yet. I will abscond with the wonderful line from the late Sen. Ev Dirksen, "a billion here and a billion there and pretty soon you are talking about real money."

However, if you consume energy, pay federal income taxes right now, pay FICA payroll taxes, smoke, or do just about anything else that is either productive or behave as a consumer, you will soon get to pay more if this left wing Democrat and the rest of the leftists in Washington can raise taxes. If the Left succeeds with this scheme, the revenues won't meet the projections or the proposed spending growth and more will be needed.

If the middle class believes that they won't be hit by the Left with tax hikes, they are deluded.

Naturally, this will have a negative impact on everyone's 401k, 503b, IRA, or other retirement vehicles as Wall Street responds. Capital gains will become as rare as one of Al Gore's polar bears.

You would think that Rangel is smart enough to know that October is not a good time for bad news on Wall Street.

Dick Morris has a column out today warning about this tax hike. Matt Drudge understated this tax hike with a column speculating about it a week ago that warned of a "$1 trillion tax hike." The ranking Republican on the House Ways and Means Committee has posted the following. Please read on.

Let me add, that as long as the Left is in control in Washington with their media buddies providing news coverage protection, the prospects for higher taxes is only a matter of exactly when, how much, and who with private resources will be hit next.

An excellent solution to begin reining in much of the fiscal mischief in Washington would be to require Congress to first pass a full, annual budget before engaging in any other legislation. Congress still has not passed an annual budget (they didn't the same time last year when the Republicans were in control either) for the fiscal year that began almost a month ago, October 1.

Please feel free to forward this to any other concerned American taxpayers.

Karl Peterjohn
www.kansastaxpayers.com

Memo: McCrery on "Mother of All Tax Hikes"
October 25, 2007
By Ways and Means Republican Press Office
MEMO
RE: "Mother of All Tax Hikes" Bill
TO: Republican Members, Republican Staff
FROM: Ways and Means Committee Ranking Member Jim McCrery


My Friends,

At a bipartisan Ways and Means caucus last night, Chairman Rangel outlined his long-awaited "Mother of All Tax Hikes" legislation. The basics of the package are simple: This is the largest individual income tax increase in history.

The bill will add a 4% surtax on Americans earning more than $150,000 a year ($200,000 for couples). That is on top of the scheduled expiration of the 2001 and 2003 tax cuts. So, under Democrats' plan, over the next few years, the individual income top tax rate in the United States will rise from 35% to 44%. By way of comparison, the other 29 Organization for Economic Co-operation and Development countries - basically other developed nations - have an average top marginal tax rate of 35.7%. In fact, only five OECD countries would have higher top marginal tax rates in 2011 than the United States if the Democrats' bill is enacted.

This crushingly high tax rate will affect approximately 10 million taxpayers directly - including those who report business income, like small business owners and farmers - but the damage will ripple throughout our economy. Because small businesses and family farms often pay their income taxes as individuals, this is a massive tax hike on the engine that drives job growth in this country.

In addition, the surtax is on adjusted gross income, not taxable income. This sounds like a technical issue, but it means that Rangel's bill will erode the value of a series of tax deductions - including for mortgage interest, charitable giving, medical expenses, state and local taxes, and the standard deduction. And, because the surtax kicks in at $150,000 for individuals and $200,000 for couples, the bill creates a monster of a marriage penalty.

Chairman Rangel will claim that these tax increases go to provide tax cuts to 90 million Americans, but he is selling pure snake-oil. Many if not most of those taxpayers are getting a purely imaginary "tax cut." Some of them are the roughly 20 million people that Republicans shielded with the Alternative Minimum Tax patch. Millions more are people who have benefited from the 2001 and 2003 tax cuts, and only get "tax cuts" if you assume that the 10% bracket, marriage penalty, and $1,000 per child tax credit will expire. Others, like single people who will now be eligible for the Earned Income Tax Credit, are getting a tax refund from the government even though they don't actually pay income taxes.

It will take time to analyze this bill and sort through the data, but we know from the start that the 90 million figure is pure hokum. In fact, before you know it more taxpayers may wind up paying higher taxes - and fewer paying less - under Rangel's plan than they did last year.

Which brings us to the larger fallacy of the Democrats' "paygo" system. There is no need to "pay for" protecting taxpayers from a massive AMT tax hike. The government never meant for the AMT to affect middle-class Americans, and we have a responsibility to make sure it doesn't. By arguing that preventing this tax increase requires us to raise taxes elsewhere, Democrats are trying to lock Congress into a system where we are guaranteed to raise taxes by $3.5 trillion over ten years.

That's right. $3.5 trillion. The baseline that the Democrats are using for "paygo" includes revenue from an "un-patched" AMT and from the tax increases that occur when the 2001 and 2003 tax laws expire after 2010. Together they total $3.5 trillion over ten years. If we play by the Democrats "paygo" rules, that is the size of the tax increase we are imposing on the American people. That will hurt our nation's competitiveness and cost us American jobs. The Rangel bill is the first step down a road none of us want to follow, and I urge you to oppose it strongly.