Giuliani, Romney lay into tax proposal

Rudy Giuliani and Mitt Romney, who are tussling over who is the more fiscally conservative, wasted no time today in lambasting a Democratic tax proposal.

US Representative Charles Rangel of New York, chairman of the powerful Ways and Means Committee, is proposing to increase taxes on hedge-fund managers and private equity executives by $48 billion -- and use the revenue to protect 21 million households from being hit by the alternative minimum tax.

Giuliani and Romney don't mention the second part -- designed to shield upper middle class families from an income tax provision aimed at the rich -- in their critiques. Instead, they cast Rangel's bill as another tax hike by big-spending Democrats.

"Today, Democrats in Washington, D.C. are unveiling a massive tax increase bill for the American people," Romney said in a statement. "Our nation cannot afford the Democrats and a Democrat President like Hillary Clinton who will sign tax increases into law. Instead of following Democrats, we need to lower taxes, cut spending, and grow the economy."

In a radio interview, Giuliani said Rangel's plan would be "devastating" to the economy.

"It makes no sense to be raising the rate on capital gains when we want more investment in this country," Giuliani said on WHO-AM in Des Moines, Iowa. "All we're saying to people is go find some place else to invest. The corporate tax rate in America is the second highest in the world. The President of France wants to lower the corporate tax rate in France because France is losing money, and their rate is lower than ours. So we've got a group of Democrats who want to go to the left of France in our economic policy. It doesn't make any sense."

Rangel's bill would increase the tax rate on hedge fund managers pay on their compensation -- often in the tens of millions of dollars -- from the 15 percent capital gains rate to as high as 38 percent. He also wants a broader tax reform next year that would permanently repeal the minimum tax, put a surcharge on wealthy households, and lower the corporate tax rate.

The divide on taxes between Republican and Democratic presidential contenders is wide and deep. The leading Republicans want to keep President Bush's tax cuts, which are set to expire on Jan. 1, 2011 at the latest. The leading Democrats, on the other hand, want to allow those tax cuts to lapse, or to repeal them sooner, in order to pay for healthcare reform and other programs.