EDITORIAL - The new Rangel-Pelosi tax plan, like just about every new and improved tax plan since 1913, is being sold to us as "revenue neutral." The concept of revenue neutrality with taxation is that for every dollar cut from one group's taxes, a dollar will be added to another group's taxes somewhere, thus keeping the total revenue stream theoretically unchanged.

In the current proposal, Congressman Rangel wants to provide a tax break to the middle class by repealing the Alternative Minimum Tax, and he also wants to lower the top marginal rate for corporate taxes. His proposal then tells us about the tax villains who will see an increase in their rates, removal of their loopholes and other nefarious terminology meant to scare a populace into believing he has their best interests at heart. Villains like the family that earns $150,000 per year, who would no longer pay a repealed AMT, but a surcharge on top of their existing taxes which exceeds the AMT. The capital gains and dividends taxes will be increased to pay for lowering the corporate marginal rate, making the proposal punitive to corporate America, not helpful. There are plenty more specific "help that person, hurt two more" examples contained in the Rangel plan, but for now, let's just understand that revenue neutral means robbing Peter to pay Paul.

Rangel claims that his plan is the next step towards fiscal responsibility. Fiscal responsibility now means that Rangel has figured out a way to not lower the debt, not lower any out of control spending, but buy votes from a sizeable majority at the expense of a rich minority. The tax burden is not lowered, it's just reapportioned to make sure punishment is doled out properly. It's not really his fault though, I suspect there really is something in the water served in the House and Senate. Whatever happened to the very elementary concept of fiscal responsibility where you don't spend more than you earn? We teach it to our children (or I hope we still do) with their allowance. We say things like "well Junior, we can't afford that right now, but maybe if you save up or ask Santa." Where exactly does the concept stop making sense?

As I mentioned before, Rangel's plan is hardly unique. It never once mentions a cost cut. Tax reforms never do. It's time they do. So here's a modest proposal for providing tax relief for the middle class and making our corporations more competitive in the global marketplace, which is what Congressman Rangel claims is his goal, I call it the "Average American's Common Sense Tax Act of 2007." The highlights are:

1) The federal budget is broken down by priority to the American people, just as each American breaks down their costs by priority and ensures the important things like mortgage, car payment, utilities and food are paid for first. This prioritization is published to the Internet and can be viewed by anyone.

2) The AMT and death tax are repealed. The revenue lost from these will be recovered by cutting as many allocations out of the budget as necessary, starting with the lowest item on the priority list already provided by Congress.

3) The corporate marginal rate is a flat 15%. See above.

4) The capital gains and dividends taxes are repealed. See above

5) The federal gasoline tax is cut to 4%. See above.

Notice in the above highlights that I never propose an increase somewhere or on someone else. That's because the average American can't do that either. If we lose revenue, we can't just go to someone and demand more money. If I make $100 less than last month, I cannot just find the nicest house on my block and go in and demand that the owner give me $100 simply because they clearly have it and by all rights owe it to me. No, we prioritize, then we begin cutting out those things at the bottom of our list that we don't really need or can do cheaper and more efficiently.

If I am $100 short this month, then I chop things off the bottom of my cost list that equal or exceed that lost revenue. That's how it works in the real world. Notice also that nowhere do I promise revenue neutrality a la GOP where I tell you about the economic growth that will replace the lost revenue in bigger tax collections. No such promise is necessary because I pay for the tax cuts directly by CUTTING things out of a bloated budget. If the revenue goes up, then maybe next year we'll add some of that bloat back in, just as Americans add in luxuries when their revenue goes back up or gets bigger for whatever reason.

If the average American can do it every single day, then so can their elected representation. I doubt the estimated $35 billion in pork for 2007 will be missed by most Americans. As a matter of fact, I bet Congress could make due just fine running on about a third of what they take in right now. Real tax reform should involve the costs of taxation going down for some or many Americans, and going up for exactly none of them.

Our progressive taxation system is already punitive towards success, it need not be more so in an attempt to protect incumbency at the federal level. If you get a chance to write or talk to Congressman Rangel or whoever your representative or Senators may be, ask them which costs they could cut to pay for real tax reform. Ask them which cost they could cut to ensure the budget has at least some surplus every year. Ask them which costs can be cut to start lowering the national debt.