Rep. Charles Rangel (D-N.Y.), the chairman of the House Ways and Means Committee and the nation's top tax-writer, held a press conference yesterday to deflate a burgeoning scandal concerning his failure to pay taxes on $75,000 in rental income from a Caribbean beach villa he owns.
When the story first broke, Rangel claimed he didn't know what "income" meant and that his wife, Alma, handled the family's investments and tax returns. Yesterday, he cast the blame even wider: It was the resort management's "failure to provide timely and regular statements," he said, and "the cultural and language barrier" of the Dominican Republic, where his luxury condo is located.
But more interesting is the degree to which Rangel relied upon superlawyer Lanny Davis over the last week to explain the basics of the tax system the chairman oversees.
If I was able to do myself what Lanny Davis was able to do, to actually get these amounts, that even though I didn't receive the checks, it had to be income if it was reducing my indebtedness.
In sharing this with my accountant, who worked very closely with Mr. Davis and the—with interpreters and the Dominican authorities, they were able to determine that my tax liability would have been little or nothing as a result of the foreign tax credit that I would enjoy and the fact that depreciation would have been taken into place.
And, over 20 years, I got half a dozen statements, some in Spanish, some in English. It showed a reduction of the mortgage. But you are right: Reductions of mortgage has [sic] to come from somewhere, and only because Lanny Davis had a team that actually talked with them in English and Spanish that, yes, I should have known you don't get a reduction in mortgage.
As I noted earlier, I still don't buy the line that the 78-year-old Rangel never took an interest in the 20-year performance of his single largest asset—he clearly marked the rent received from the property as "income" on his congressional financial disclosure forms, and he surely must have known his mortgage was paid up after he stopped listing it as a liability on those forms in 2003.
But even more galling is that the chairman of the Ways and Means Committee needed a white-collar criminal lawyer to explain the U.S. tax code to him. Rangel's fitness to serve notwithstanding, that says a good deal about the state of our tax system.