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  • « McCain bests Palin from the podium | Main | What the Log Cabin endorsement means this time »

    September 05, 2008

    Charlie Rangel's many homes problem

    Posted by: Andoni

    Rangel_houseNOTE UPDATE AT END (Pelosi calls for ethics investigation + new problems).

    John McCain isn't the only prominent politician to have a house problem. Now Democrat Charlie Rangel has a huge house problem with tax evasion implications.

    Last month The New York Times discovered that Rangel had four rent subsidized apartments in New York. No matter how you cut it, this is two more than any other ordinary individual is allowed to have. The story wreaked of favoritism by the developer because of Rangel's positon, and Rangel's explanations were lame.

    Today's New York Times  discloses that Rangel, chairman of the House Ways and Means Committee, which writes the US Tax Code, bought a house in the Dominic Republic for which he received $75,000 rental payments, but never declared and never paid taxes on the income. Excuse me, but as someone who is responsible for the US Tax Code, he cannot claim ingnorance of the tax laws. He tried to explain this away with excuses that his wife was handling the investment property, the management company didn't send timely payments, and with the assertion that after all is said an done, he won't owe federal taxes because he also forgot to list it on his taxes to claim depreciation as a rental property which would offset the taxes owed.

    Come on Congressman. You don't list it on your taxes because you don't want the government to know about it. It's that plain and simple. As chair of the Ways and Means Committee (but probably only a ranking member when he bought the house), you should have known that you had to set up a mechanism for mortgage payments and rental income that would be within the US Tax Code. If you didn't know that, you should resign immediately from the committee because you are incompetent.

    The Internal Revenue Service needs to pursue this as they would against any other ordinary citizen. The IRS needs to be completely transparent on this so we are satisfied that he is not getting special treatment. If the IRS finds he was deliberately hiding income, he should go to jail like any other tax evader. There should also be a House Ethics Committee investigation (that will make two for him, one for his apartments in New York and now for his offshore house) and if found that he acted improperly, he should be removed from the House.

    Until this tax evasion issue is decided, he should step aside as chair of the Ways and Means Committee. His presence would just reek of impropriety. It would also be an election issue against the Democrats.

    So, it isn't just the Republicans who have a house problem. Now the Democrats do too, and in their case their case there is a good possibility that it is criminal. Even if John McCain doesn't know exactly how many houses he has, at least all of his appear to have been purchased and kept legally.

    UPDATE: Today's New York Times  reports that Rangel did not pay interest on his mortgage for this home for more than a decade because it was forgiven by the developer. This is also a big problem for Rangel. Although it is OK to give someone an interest free loan, the tax law says that the recipient has to declare the money saved as income. The thousands of dollars that he saved in interest now appears to be undeclared income, which again gives the appearance of tax evasion. House Speaker Nancy Pelosi knows a crisis when she sees one and has called for an ethics investigation.

    In trying to follow the chain of events in the Times story today on this and other properties the Rangels own, it is quite confusing. In some years they list and report income from their properties and in others, they do not. Their excuse is that in some years the property lost money so there was no income to report. Huh? Losses are deductible and very useful on a tax return. If he was doing his own taxes and made these kinds of decisions, he has demonstrated that he should not chair or even be on the Ways and Means Committee. An accountant should have known better.

    I think Rangel is entering a box where the only two reasonable conclusions are 1.) he really doesn't understand the tax laws, or 2.) he was trying to hide investments and income. Maybe the fact that he did not declare losses in bad years (the ignorance argument) will save him from jail, but it supports conclusion #1 and he should not be on the Ways and Means Committee.

    As a side note, it is absolutely amazing, time after time, how a long established politicians can be coasting along in a career with nothing challenged, then one person gets pissed at something and reports it (his sweet rent controlled apartment deal in NY) and then the press starts looking a bit closer at the person, and the whole seam starts ripping apart.

    Should Sarah Palin be paying attention?

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    Comments

    1. Allan on Sep 5, 2008 6:25:42 PM:

      Agreed. Too many ethical/legal questions swirling around Rangel.

      Oh and Andoni, in this context you mean "reeked" of favoritism.

    1. Andoni on Sep 5, 2008 7:59:03 PM:

      Fixed the typo, thanks.

    1. tristram on Sep 5, 2008 9:10:40 PM:

      That seals it, neither Rangel nor McCain gets my vote for President. And I'll cross John Kerry, Mitt Romney and Donald Trump of the list for good measure.

    1. tristram on Sep 5, 2008 9:11:37 PM:

      "off," not "of"

    1. Kevin on Sep 5, 2008 10:48:55 PM:

      This story has been disturbing to watch unfold. It would be yet another tragedy of Washington if it turns out Rangel's career ends on this note. It's another reminder that corruption has no party.

    1. Mary Roberts on Sep 9, 2008 5:14:35 PM:

      Rangel says he did not know he has had an interest free loan for 20+ years and that he did not know he had to report the income. Either he is a flat out liar or way too dumb to be chair of the Ways & Means Committee which oversees taxation ... OR BOTH!

    1. r.macleish sr. on Sep 3, 2009 10:19:13 PM:

      The man is crooked and needs to serve time!

    The comments to this entry are closed.

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