WASHINGTON – Ways and Means Committee Chairman Charles B. Rangel introduced landmark legislation today to reduce taxes on working families and reform tax laws to eliminate loopholes and narrowly-targeted benefits. Chairman Rangel’s legislation, the Tax Reduction and Reform Act of 2007, would provide tax relief to more than 90 million working families through a permanent repeal of the individual alternative minimum tax (AMT) and enhancement of other tax benefits while also significantly improving the competitiveness of American businesses.

"This legislation will provide tax relief to more than 90 million working families and cut the corporate tax rate to help American companies stay competitive internationally," said Chairman Rangel. "For too long, hardworking families have struggled to keep pace with the rising cost of living in America. This legislation would put money back in their pockets to combat the growing economic insecurity gripping our nation.

Chairman Rangel’s landmark legislation will provide tax relief to more than 90 million hardworking families through permanent repeal AMT, refundable child tax credit, an increase in the standard deduction, and enhanced earned income tax credit.

Chairman Rangel’s legislation also includes provisions for a one-year exemption from the AMT and extension of popular tax credits that expire at the end of the year. These provisions will be extracted from the larger bill in the coming weeks for expedited consideration before the Congress.

"The provisions in this bill would reform the tax code to provide a greater sense of equity and fairness that is so critical to our voluntary tax system," offered Rangel. "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rolled up their sleeves to discuss tax reform and during that time the tax code has become a jumbled mess of outdated and inequitable provisions that cry out for simplification. The package I proposed today is entirely revenue-neutral to ensure that the tax cuts we provide are not paid for by future generations or through reckless borrowing as has been the case in recent years."

The Tax Reduction and Reform Act of 2007 also includes a significant reduction in the top corporate marginal tax rate to help American companies remain competitive internationally. The bill proposes a reduction in the rate to 30.5% from the current 35% level.

It would also permanently extend the current, enhanced expensing rules that help small businesses compete.

The legislation changes the tax treatment of "carried interest" for fund managers. They will no longer receive the lower capital gains rate of 15% for what is essentially a management fee or payment for services, which generally are taxed as ordinary income.

The Tax Reduction and Reform Act of 2007 is entirely revenue-neutral. The tax relief provided to more than 90 million working families is offset by adjustments to current law that essentially limit the benefits of the AMT repeal at higher income levels.

While the legislation begins to limit these benefits for taxpayers earning $200,000, an overwhelming percentage of families earning between $200,000 and $400,000 will still receive a net tax cut, since they will no longer have to pay the enormous tax liability of the AMT.

Chairman Rangel’s legislation is the most comprehensive overhaul of the U.S. tax code introduced since the Tax Reform Act of 1986.

Please click here to view a summary of the legislation or here for the text of the bill as introduced.

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