The problems with Rangel's tax bill

Real Clear Politics has a good update on the Rangel tax bill, specifically focused on Republican plans to use the bill against Democrats in the 2008 elections. The article expands on some flaws that I didn't realize:

Mr. Rangel's plan would slap a hefty 4 percent surtax on single taxpayers who earn more than $150,000 and on married couples filing jointly who make more than $100,000 each. In effect, they are "putting a massive new marriage penalty into the tax code," Ways and Means Republicans charged. [emphasis added]

Moreover, under Mr. Rangel's bill "you can kiss your deductions goodbye," they add. The surtax would be levied on adjusted gross income before any deductions for charitable contributions, mortgage interest, medical costs, and other expenses.

But the new surtax Mr. Rangel wants to impose on working Americans would also affect an estimated 24 million small businesses who pay their taxes through individual tax returns. Many will lose deductions that lower their taxes on business income, while incorporated businesses will benefit from a rate cut, making it harder for small employers to compete with the Wal-Marts of this world. Mr. Rangel would also slap his surtax on capital gains, effectively raising the 15 percent long-term capgains rate by another 4 percent or more for millions of investors.

Jack Kemp offers some important advice to Republicans ready to pounce on this. Says Kemp:

"It isn't enough to be against Rangel's bill, we have to offer our own proposals. He has, to his credit, begun a debate over tax reform that lowers the corporate tax rate from 35 percent to 30 percent, but pays for it by raising taxes on capital gains and capital investment which is a bad idea."

Sounds familiar. But based on recent trends, such sound advice will, of course, be completely ignored.