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House Tax Chairman Opposes Using Tax Code To Recoup AIG Bonuses

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Rep. Charlie Rangel (D-N.Y.) tried to get out in front of a congressional mob on Tuesday. Democrats in both the House and Senate have been calling for the IRS to use the tax code to recoup bonuses paid out to AIG executives with federal bailout money. Rangel, chairman of the House Ways and Means Committee, which writes the tax code, said that the approach was inappropriate.

"It's difficult for me to think of the code as a political weapon," said Rangel, who spoke to a handful of reporters outside his office.

"Is this an indictment or a bill?" asked Rangel. "Are they naming people? I mean, are they naming the taxpayers?"

Rangel said he sympathizes with the effort, but not the means it takes. "There's no way that good thinking Americans should reward people when they've been complicit in wrong doing," he said. "But as a former federal prosecutor, as I recall, it was the criminal code that you dealt with, not internal revenue."

Using the tax code could undermine citizens' faith in it as a fair instrument, according to Rangel. "There is some concern that I have that people will lose credibility in the income tax system and think of it as a political weapon rather than a revenue raiser," he said.

"What bothers me is my colleagues in the House are very angry, as is the administration, with these people at AIG and they want something and they want something now," he said. "This is a venting type of thing."

Despite his reservations, Rangel said he's willing to talk through whatever proposals members of Congress bring to him. "I would hope and assume they have alternatives to using the tax code as a method to either retrieve the federal money or to punish them," he said. "You know, when you get angry you don't think as clearly as you do when you calm down."

UPDATE: Following his conversation with reporters, Rangel met with House Speaker Nancy Pelosi (D-Calif.) and Financial Services Committee Chairman Barney Frank (D-Mass.). On Wednesday morning, said a Rangel aide, he'll meet with members of the committee to discuss a legislative response to the AIG bonuses. He remains open to discussing all options.