UPDATE 4-Congressman Rangel steps down as top U.S. tax writer

Wed Mar 3, 2010 5:33pm EST

Related Topics

* Rangel gives up committee chairmanship under pressure

* Democrat cites election-year worries

* Stark next in line to head tax-writing panel

(Updates throughout)

By Thomas Ferraro and David Morgan

WASHINGTON, March 3 (Reuters) - Representative Charles Rangel stepped down on Wednesday as the chief tax writer for the U.S. Congress, pending completion of an ethics investigation of the New York Democrat's financial dealings.

Rangel asked for a leave of absence as chair of the House of Representatives Ways and Means Committee amid growing calls by Republicans and some Democrats to resign from the position.

The House ethics committee publicly admonished Rangel last week for taking corporate-sponsored trips to the Caribbean in 2007 and 2008 in violation of House gift rules.

Rangel has pointed out that the panel's report said he did not know the trips were underwritten by corporations, though two of his staffers did.

Republicans charge that Rangel is unfit to head the committee and there has been concern among Democrats that the ethics investigation could hurt them in the November election.

"He said he didn't want to be a distraction for us," said Democratic Representative Richard Neal of Massachusetts.

"He (Rangel) was a thorn in their side," said Bruce Berg, a political science professor at Fordham University in New York.

Democrat Pete Stark, one of the House's most liberal and fiery members -- he once called a Republican colleague "a little wimp" and another "a whore for the insurance industries" -- is the line of seniority to take over the chairmanship of the powerful committee that originates U.S. tax legislation.

The full House will formally elect Rangel's replacement based on a recommendation from the Democratic majority. Until then, Stark is acting chair.

The House ethics panel -- three Democrats and three Republicans -- is still probing other matters involving Rangel, including his use of a rent-controlled apartment and his fund-raising for the Charles Rangel Center for Public Service in New York.

He was urged to step aside before the House voted on a Republican resolution to strip him of his chairmanship, which could have happened as early as Wednesday.

Stark, as chairman of a House health subcommittee, has held hearings critical of for-profit healthcare providers.

"We would expect him to continue that now that he has an even bigger platform from which to attack the industry," said Rick Weissenstein of Concept Capital, which tracks Congress for institutional investors.

Rangel has been a key player in efforts to help President Barack Obama pass legislation to revamp the healthcare system.

He took the lead in writing the House bill's tax provisions, including one that would have imposed a 5.4 percent surtax on millionaires to help pay to provide coverage to millions of uninsured Americans.

During the 20-year period that ended in December, Rangel's campaign committee raised nearly $20 million, about a fourth of it from people in the financial industry, according to figures compiled by the nonpartisan Center for Responsive Politics.

At a hastily called news conference at which he took no questions, Rangel said: "I have this morning sent a letter to Speaker (Nancy) Pelosi asking her to grant me a leave of absence (as committee chairman) until such time as the ethics committee completes its work."

Pelosi promptly honored Rangel's request, commending him for "his decades of leadership on jobs, healthcare, and the most significant economic issues of the day."

House Republican leader John Boehner, who had pushed for Rangel to step down, mocked his statement that he was taking a leave of absence.

"There is nothing in the rules of the House that refers to temporarily stepping aside. Either you're the chairman or you're not," Boehner said.

"He does not deserve to be a member of the Democrat leadership nor as chairman of his committee."

Rangel, long one of the most powerful members of Congress, has become an embarrassment for the Democratic leadership.

Pelosi vowed to "drain the swamp" of corruption shortly before Democrats won control of the House in 2006 after a decade of Republican rule.

Rangel is in his 20th two-year term in House and was re-elected by his New York district in 2008 with 89 percent of the vote. (Additional reporting by Andy Sullivan, Donna Smith and Kim Dixon; editing by Chris Wilson and Vicki Allen)

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