Shouldn’t the Folks Making the Rules Know the Rules?


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If you follow tax law and developments, a few names pop up over and over again. One of those names is Charles Rangel, the Chairman of the Ways & Means Committee.

According to their website, the Ways & Means Committee has the responsibility for raising the revenue required to finance the Federal Government. This includes individual and corporate income taxes, excise taxes, estate taxes, gift taxes, and other miscellaneous taxes.

So, you’d figure those making the rules would be familiar with them, right?

Apparently, the answer is: wrong! Charles Rangel, the Chairman of this Committee, had to admit earlier this week that he owed a substantial amount in back taxes from rental property he owns outside of the United States. Reports claim that Rangel underreported about $75,000 in rental income from a beach house rental home in the Dominican Republic.

I don’t want to turn this into a political soapbox. I don’t care what party Rangel belongs to. But, I do care that the head of the government branch that makes tax rules impacting the rest of us has a shaky grasp on the idea that U.S. citizens are required to report income from all sources, inside and outside of the United States, and are responsible for paying taxes on that income.

It’s not that lawmakers are unaware that Americans have income sources from outside the country. Congress has also been making a lot of noise recently about offshore trusts, and their belief that these are largely used to shelter income and evade taxes. And earlier this year Congress slipped legislation through (hidden in one of the Iraq spending bills) that created a massive exit tax on Americans who are seeking to leave the country by expatriation.

It bothers me that Rangel claimed he had done nothing wrong, and has blamed everyone from his wife and his accountants to the people in the Dominican (for speaking Spanish, which he doesn’t understand). It bothers me that he doesn’t feel he needs to step down from the Ways & Means Committee, or be subject to any consequences for his actions, apart from having to repay the missing taxes. And it bothers me that if he were an average American taxpayer under audit for the same reason, he could face time in jail in addition to a huge fine.



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