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Dear Mayor Bloomberg:
I was interested in recent comments you made on your radio show regarding my tax reform proposal. You said that my bill would “certainly hurt New York.” Given that so many individuals and businesses in New York City would benefit from my bill, I would like to understand exactly what parts of the plan you find to be troubling.
In fact, I think that, if you look closely, you will see that millions of New Yorkers would see their taxes cut by my reforms. First and foremost, city residents would benefit from a repeal of the alternative minimum tax (AMT), a tax that primarily falls on working families. According to the city’s own calculations, more than 181,000 New York City families paid the AMT in 2005 — a number expected to explode to more than 751,000 families by 2010. And 89% of those taxpayers will earn between $50,000 and $200,000 a year. By eliminating the AMT, my bill would give all those New Yorkers a substantial tax cut.
Compared to the recommendations released by President Bush’s Advisory Panel on Federal Tax Reform — limiting or repealing key deductions such as mortgage interest and State and local income and property taxes — the AMT elimination would deliver real benefits to the city. If you disagree, please tell me what you would recommend.
My bill would also provide significant tax relief to the businesses — from large financial corporations on Wall Street to retail businesses on 125th Street — that bring New York City to life. According to the most recent publicly-available data, more than 48% of businesses in New York City pay corporate tax. My plan would slash the corporate tax rate from 35% to 30.5%, giving them the most significant tax cut they’ve seen in two decades.
New York-based unincorporated businesses would also get a boost. The AMT is now a big burden for many of these firms — and eliminating it would yield major dividends. If you think there is a better way to keep New York City businesses competitive and prosperous, by all means share your thoughts.
It is true that under my bill some would be asked to pay more than they now pay. In particular, private equity fund and hedge fund managers would start paying ordinary income tax rates on their compensation, rather than the 15% capital gains rate they currently pay. If you or they believe that is unfair, I would welcome hearing a clear explanation of how their compensation differs from other workers performing essentially the same services.
Mr. Mayor, I know you believe deeply in the need to reduce poverty and improve the situation of New York’s working poor. You have put forward a number of thoughtful, progressive proposals to help the millions of New Yorkers who battle economic desperation every day.
To that end, my plan includes provisions that would be of tremendous benefit to working families — and which I believe you should support. As you know, a few extra dollars each month can mean a world of difference to families looking to escape the grasp of poverty.
My bill would expand the child tax credit to more families and enhance the standard deduction so that workers receive more of their salary before paying income tax. I have also proposed an expansion of the earned income tax credit, which you have acknowledged as a critical benefit to New York families. Recent calculations show that over 700,000 children living in poverty in New York City will be helped under my bill.
I would encourage you to take another look at my tax reform plan. Perhaps, as you learn more about it, you will change your mind about its impact on New York City.
I look forward to getting past broad political rhetoric and working with you to craft a tax package that helps our fellow New Yorkers. With warm regards, I remain.
Sincerely yours,
Charles B. Rangel
This open letter was orginally published in the New York Daily News
on Wednesday, November 21, 2007.
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