Charlie Rangel (D-NY), who represents Wall Street and serves on the House Ways and Means Committee (through which any tax bill must necessarily go before passage by the House...) has stated that he opposes using the tax code to claw back bonuses from AIG employees. From the The Huffington Post:
Democrats in both the House and Senate have been calling for the IRS to use the tax code to recoup bonuses paid out to AIG executives with federal bailout money. Rangel, chairman of the House Ways and Means Committee, which writes the tax code, said that the approach was inappropriate.
"It's difficult for me to think of the code as a political weapon," said Rangel, who spoke to a handful of reporters outside his office.
"Is this an indictment or a bill?" asked Rangel. "Are they naming people? I mean, are they naming the taxpayers?"
Rangel said he sympathizes with the effort, but not the means it takes. "There's no way that good thinking Americans should reward people when they've been complicit in wrong doing," he said. "But as a former federal prosecutor, as I recall, it was the criminal code that you dealt with, not internal revenue."
Yes, Mr. Rangel, that is the purpose of the criminal code: dealing with wrongdoing." The PROBLEM is that nothing that was done here was ILLEGAL. Rather it is the LEGALITY of these contracts that are posing such a problem.
Second, the tax code can be used to address inequities. Just as the tax code can be used to benefit certain persons or segments of the population, so too may it be used to the detriment of others. Don't tell me its okay to use the tax code to carve out every corporate loophole and tax haven imaginable, and yet suddenly get one's hackles raised at the very idea of using the tax code to right an economic injustice (rather than create one).
Using the tax code could undermine citizens' faith in it as a fair instrument, according to Rangel. "There is some concern that I have that people will lose credibility in the income tax system and think of it as a political weapon rather than a revenue raiser," he said.
First, Mr. Rangel belabors under the impression that citizens have any faith at all in the fairness of the tax code. After years of corporate loopholes, with the richest 5% getting all the earnings and breaks for the most of the last three decades, I'm afraid that the reputation of the tax code's "fairness" is already in serious tatters. Its been used as a "political weapon" by elites against the poor, the unions, and anyone else big business doesn't like. So, spare me the monologues about the integrity of the tax code.
Second, is it really better to try to retain some ephemeral "faith" in the tax code or confidence in our own government's ability to right these sorts of economic wrongs when they arise? If not the tax code, what is Mr. Rangel's more-pure alternative for redress? I know that Democrats have been using their powerlessness as an excuse for doing NOTHING for the past decade, but that's no longer going to wash when you control the federal government.
As Americablog put it:
Now the Republicans can legitimately blame the House Democrats for blocking the American taxpayers from making sure the bailout monies are spent responsibly. Possibly the most idiotic, tone deaf political move in a generation. The Republicans wanted their issue? Charlie Rangel just handed it to them. Talk about obscene.
If you, like me, believe that Charlie Rangel is off base here (particularly if you are a New York constituent), please give Mr. Rangel's office a buzz and let him know it:
House Contact Form: https://forms.house.gov/...
Capital Switchboard: 1-800-355-3588