Representative Charles Rangel of New York, chairman of the House Ways and Means Committee has introduced a new bill that would repeal the alternative means tax (AMT). The bill would also reduce corporate tax rates from 35% to 30.5%. The tax rates of hedge fund and private equity fund managers would also rise.

The bill is not expected to be voted on until next year. But Rangel hopes to prevent the AMT being applied to 21 million more Americans next year.

While we won't comment on the politically charged tax rate changes we do support the reduction of tax rates on corporations. Simply because taxes to corporations are always passed on to consumers in the form of price increases.

FIN 48 disclosures rule requires public companies to disclose how much they have set aside to pay tax authorities if certain tax avoidance strategies are successfully challenged by the IRS. The disclosure requires the company to attach a dollar figure to tax-savings that could be vulnerable. The disclosure also has the effect of letting the IRS know which companies are taking a more aggressive tax position.

As a result of this disclosure, the Senate's Permanent Subcommittee on Investigations has issued 30 letters to companies asking for more details on the tax arrangements that led to their FIN 48 disclosures.

Henry Paulson, Treasury Secretary has spoken several times that he believes the complexity of corporate tax rates are harming the competitiveness of US companies in world markets. Paulson said the corporate tax code "includes ad hoc policies and preferences that result in a narrow tax base and create distortions that divert capital from its most efficient use."

Paulson has also spoken in the past about a need to reduce the overall rate of taxes paid by businesses. However, it doesn't appear that the political climate will make that a reality anytime in the future. People always think that corporate taxes are paid by big companies and not just passed along to the consumer in the form of higher prices. As a result it makes raising the corporate tax rate a popular move when in comes time to raise for money for the government.