From NBC's Mike Viqueira and Mark Murray
A leading House Democrat has unveiled a long-awaited tax reform package, including a "fix" for the Alternative Minimum Tax that would cost $800 billion over the next 10 years.
To pay for it, Ways and Means Chairman Charlie Rangel (D) proposes that married couples earning more than $200,000 pay a "replacement tax" of 4%, and 4.6% on income in excess of $500,000. Rangel says that the AMT is now affecting 23 million taxpayers.
Rangel would also increase the standard deduction and expand the number of lower-income people who are eligible for the Earned Income Tax Credit. He says that all total, 90 million Americans will get a tax cut if this legislation were to become law.
Rangel says that he will also pay for it by closing loopholes in existing laws. He would limit itemized deductions and personal exemptions for high income individuals, prevent hedge fund managers from using offshore tax havens to defer taxes on compensation, and several other measures.
Republicans are already blasting the proposal, accusing Rangel of "selling snake oil," and calling the 90 million figure "pure hokum." They see the 4% replacement tax as "a crushingly high" tax rate that will affect 10 million people. In fact, Romney just put out a statement criticizing the proposal -- and linking it to Hillary Clinton. "Today, Democrats in Washington, D.C. are unveiling a massive tax increase bill for the American people. Our nation cannot afford the Democrats and a Democrat President like Hillary Clinton who will sign tax increases into law."