Rep. Charles B. Rangel today made the following statement about competing marriage penalty relief proposals slated for House consideration today (A summary of Rep. Rangel’s alternative follows the statement):
“The House Republican leadership says it’s for marriage penalty relief but all they offer is more press releases.
“They put forth a bill that is full of holes. For the next few years, it continues the marriage penalty on the working poor as if married couple should be penalized just because they our poor. Then, the Republican bill gives no marriage penalty tax relief to 10 million middle-income families who fall under the Alternative Minimum Tax. Another three million middle-income families get less relief. Meanwhile, the Republicans leave to the children in these families even more debt to pay off.
“The Democrats offer twice as much marriage penalty relief as the Republican bill does because we make sure no middle class family is left out. The AMT is taking away $100 billion in middle-class family tax cuts that the Republicans promise but do not deliver.
“If the Republicans were serious, they would be working in a bipartisan way to craft a bill that would truly remove the marriage penalty while ensuring deficits do not grow. They are not truly interested in helping families as they are in perpetuating a marriage penalty so that every year they can again pretend to fix it with more press releases.”
# # #
Description of Rangel Substitute to H.R. 4181
Scheduled for Floor Action on April 28, 2004
Under the Rangel substitute, the marriage penalty provisions related to the standard deduction and 15% bracket would be made permanent. In this respect, the Rangel substitute is identical to H.R. 4181.
The 2001 tax bill also provided marriage penalty relief for low income working families receiving the benefits of the earned income tax credit. It provided marriage penalty relief in this area by increasing the income level at which the credit begins to phase out. When the increase is fully phased in, it would be $3,000 above the otherwise allowable income level. The Rangel substitute makes the $3,000 increase effective next year and it makes the provision permanent.
H.R. 4181 provides marriage penalty relief from the regular income tax but makes no adjustment to the minimum tax. As a result, millions of married couples will receive no benefit or less than the relief that is promised by H.R. 4181. Under H.R. 4181, the minimum tax will deny $99 billion in promised tax benefits. The Rangel substitute contains provisions to ensure that the minimum tax will not deny any of the promised benefits.
The Rangel substitute would be revenue neutral. Its cost would be offset with surtax on approximately the top 0.2% of households. The surtax would by 3.6% on Adjusted Gross Income (AGI) OVER $1 million for couples and $500,000 for singles and amounts to a small portion of this group’s 2001 and 2003 tax cuts. Even after this change, those in this category would still have average annual tax cuts still exceeding $100,000. They would also still enjoy the largest percentage increases in their after-tax income; even after this surtax, the Bush tax cuts would still have conferred the largest relative–not just absolute–tax cuts to the rich.