Tax expert Rangel mangles facts in ethics mess

[September 15, 2008]  WASHINGTON (AP) -- Even when Rep. Charles Rangel tries to explain how he got into his tax mess, he mangles the facts so much it's easy to see how his accounts -- and accountants -- are muddled. And this from the lawmaker who has such a big say in determining who pays taxes and how much.

The chairman of the tax-writing House Ways and Means Committee spent the past week reeling from a series of embarrassing revelations: He failed to report about $75,000 in rental income over two decades from a beach villa he owns in the Dominican Republic; he owes about $5,000 in back taxes to the government; he never knew he paid no interest on the villa's mortgage for more than a decade.

The New York Democrat is resisting calls from Republicans that he should lose his committee post, among the most coveted on Capitol Hill. The House ethics committee has begun inspecting Rangel's personal and professional life.

Rangel, 78, was elected to Congress in 1970, running as a reformer against the prominent Adam Clayton Powell Jr. and Powell's questionable behavior. Since then, Rangel has sailed to re-election in a district where the political center of gravity is the historic black neighborhood of Harlem.

The district today has far more Hispanics and saw major gentrification in the past decade. Not everyone is willing to let the ethics problems slide.

"He should have known better. He did know better," said Eulalia Brooks, 34, who works for a Harlem job-training organization.

"It's sad to see it happen. He's done some good things in the community, but he can't use what he's done in the past to explain his taxation problems," she said. "If he's that careless in his personal dealings, then he's probably equally careless in his chairmanship."

Asked if the congressman had a firm grasp of his finances, his lawyer Lanny Davis, said, "He has learned important lessons."

Rangel has acknowledged "irresponsible" errors, then gone ahead and committed some more blunders:

• He repeatedly referred to his three New York City apartments as "rent subsidized." They are not; they are rent stabilized, a big difference. A subsidy means the government pays part of the rent. New York rent stabilization laws put a cap on how much rents are raised.
  
  In the full House, when Republican leader John Boehner of Ohio mentioned "rent subsidized" apartments, Rangel angrily interrupted, hollering, "They're not subsidies, it's stabilization." The source of Boehner's confusion was most likely Rangel's own words earlier in the day.

• At a news conference, Rangel said language difficulties with the Spanish-speaking operators of the beach resort contributed to his confusion about the finances of the beach villa. Equally confusing is his version of the facts.
  
  He and his lawyers repeatedly said the price of the beach villa was $82,750. Yet, in a letter to House Speaker Nancy Pelosi, D-Calif., Rangel cited a price of $88,900. Asked about the discrepancy a day later, aides said they were not sure of the origin of the higher figure.

• The villa issue surfaced because some years, Rangel reported income from the property in congressional paperwork. Other years he did not. In recent years, Rangel is usually late filing his financial records to Congress.

Rangel's basic defense is that he paid little or no attention to a building he bought, the mortgage he got to buy it or the rent it earned to pay the mortgage. Or the taxes due on someone else paying his mortgage. He claims to have no idea what the house is even worth.

Davis says that will change now that he has hired a second lawyer to monitor "all his tax and financial statements going forward and be sure they are meticulously correct."

Republicans say Rangel had to have known exactly what he was doing.

"It is a sick irony that the top legislator on tax policy in the House is circumventing the very tax laws that he himself has authored," said Ken Spain, spokesman for the GOP's House campaign committee.

Bill Perkins, a Harlem state senator, said he wants to take Rangel at his word that it was an honest mistake, but the pressure from now on will be to perform perfectly.

"There's no room for error. Otherwise it will be unforgivable," said Perkins. "He has to be able to move forward and prove he's up to the role of being the chair of one of the most powerful committees in the Congress."

[Associated Press; By DEVLIN BARRETT]

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