With Rangel's leave of absence from the chairmanship of the House's taxwriting Ways & Means committee, Pete Stark, ranking member after Rangel, became acting chair. Stark is known for both his expertise in and passion for health matters, as well as for what some would call refreshingly honest comments about the day-in day-out political shenanigans but others consider a brusque and confrontational approach. Stark also was involved in an ethics investigation involving tax matters--not the ideal spotlight for the head of Ways & Means. Although the investigation did not find that he had committed a violation, it certainly caused heads to turn. He had apparently claimed a homestead tax exemption for his temporary residence in the DC area, even though he maintains his permanent home and voting address in his home state of California.
Lesson in these tax problems that caused difficulties for both Rangel (who was admonished) and Stark (who got off the hook)?--the little you save in taxes isn't worth it. Be a good citizen, pay the taxes to state and federal government, and feel good that you have helped share the burden of funding the many services that we all demand and need, from garbage pickup to clean water, from sewers to police and fire protection, from the Center for Disease Control to FEMA. When the needs for which these various agencies arise, we holler and scream if they are not functioning properly. The rest of the time, it seems that many of us are eagerly doing everything legal (and sometimes quite a bit that's illegal) to get out of doing our share.
So after just a day of getting used to the idea of Stark as the putative new (acting) head of Ways & Means, looks like we have another adjustment to make. Apparently Stark is staying with his health subcommittee chairmanship, and instead Sander Levin, Michigan Democrat who is the next most senior member of the majority party, is taking over the acting helm. Levin is a good choice. Unlike so many from the bank-dominated northeast, he has understood the fundamental unfairness of the way carried interests in hedge funds and private equity partnerships have been considered to be taxed. (I say "considered" because there is still some question in my mind whether the code actually supports the traditional position on this issue, but that's a technical question not worth going into at this point.) Levin wants the carried interest taxed currenty as compensation--no more claiming capital gains, no more deferral. That's the right answer, since otherwise the particular industry in which one happens to earn one's pay is providing a huge tax break--the difference between the highest ordinary income rates and the very very low capital gains rates. Fixing the inequitable carried interest treatment is a good item to have high on the Ways & Means agenda.