Edwards: Bold, Brave, Or Foolish?

Nothing original to say about John Edwards's tax overhaul proposals, but they deserve some attention. Edwards would raise the capital gains tax rate from 15% to 28% -- the Dow's slide today is an interesting frame -- he'd greatly expand the Earned Income Tax Credit and would create some tax breaks for the middle class.

The news is bleak for those in the higher income brackets: Not only would private equity and hedge fund execs have higher rates on “carried interest,” but executives will also see a $1-million cap on how much they can defer into their pensions.

Mr. Edwards also said he would “declare war on tax havens” by giving the IRS the authority to investigate offshore tax breaks.

The politics is interwoven with the policy: both the establishment and insurgent wings of the Democratic Party worry about the politics of taxes, and Edwards is the first Democrat of national stature to confront this sacred cow. Most Democrats are willing to scrap the Bush tax cuts for the wealthy; few are willing to acknowledge that they can't fund their "investments" without sacrifice, and unless they embrace supply side economics, they're going to have to deficit spend or raise taxes. Edwards has once again pledged to raise taxes on the wealthy and cut taxes for the middle class. His rivals will be challenged to follow his lead. It could be political suicide, or it could be audacious enough to draw a real contrast between Edwards and the field. Populists have been aching for a clash of ideas about taxes for a long time. They have one now.

Here's the best of what I've read:

Peter Baker sees a broad turn to the left.

Dan Balz asks whether Edwards's ideas can move voters?

Some quirky headlines from Google News:

And Mitt Romney goes to town:

"[Y]ou ought to be able to save your money and you ought to have a special tax rate [on your savings]… the tax rate ought to be absolutely zero. … [Edwards is] going to announce today that he's in favor of a plan that let's you save $250 tax free. That's not going to pay for college, or retirement, or a car – maybe a bike…"

Comments

Edwards is the only brave one out there. He is not playing polititics, instead he is leading from the front. He deserves to be the president.

Posted by Andy | July 27, 2007 9:17 AM

The cry baby Romney is crying because Edwards new tax policy will take away his millions (out of billions). Romney is a super rich flipflopper who wants to exploit poor people's money and save his own.

Edwards needs to ignore dumb Romney.

Posted by Timmy | July 27, 2007 9:30 AM

"Edwards would raise the capital gains tax rate from 15% to 28%"

Ugh. Edwards would raise the top capital gains tax rate to 28%. This rate would only apply to high-income investors, not middle-class investors.

A not unimportant distinction.

Posted by Petey | July 27, 2007 9:33 AM

Here's the Edwards tax reform info sheet. And the relevant section about who the 28% rate would apply to reads (my bolding):

Restore Fair Taxation of Wealth: To ensure that the wealthiest Americans are paying their fair share of taxes and to reduce the economic distortions from tax shelters resulting from large capital gains preferences, Edwards will raise the top tax rate on long-term capital gains to 28 percent for the most fortunate taxpayers, the same rate signed into law by President Reagan. The 28 percent rate will ensure that high-income investors will pay taxes on their investment income at a similar rate to what regular families pay on their earned income.

Posted by Petey | July 27, 2007 9:37 AM

Edwards once again has staked out a position to the left of where the other top two dare go. Obama has indicated he'll raise the cap gains rate for high income people to 20 percent, and he'll hope this enough to blur the difference, just as he hopes no one notices that his health care plan doesn't cover everyone. On every issue, Clinton and Obama have to figure out how close they can get to Edwards without tarnishing their electabilty--something Edwards doesn't have to worry about, or chooses not to.

Has someone in third place in the polls every so thoroughly controlled the policy debate?

Posted by david mizner | July 27, 2007 10:27 AM

Edwards is the man! And all the sundries like "I have a new position every alternate day" Romney are scared sh*t because Edwards has potential to win all 50 states. Edwards is the only one who has potential to win red states everywhere.

We need a real change in this country for sure.

Posted by Kel | July 27, 2007 12:14 PM

Edwards swung right back at Romney today:

http://johnedwards.com/news/press-releases/20070727-romney-attacks/

"Every time another radical Republican running for president speaks, the American people are reminded of how out of touch with economic reality they are. Example A: Mitt Romney.
"Romney, who is worth hundreds of millions of dollars, should be ashamed for attacking my economic plan, but it's not surprising he is. I want to rewrite our tax code to make it fair and help hard-working Americans save some money to give them a better shot at the American Dream. Mitt wants to make sure that the wealthiest Americans just keep getting wealthier and let everyone else pick up the scraps. Mitt's all about more, more, more for the people who already have the most - and that's just wrong.

"The truth is Mitt Romney shouldn't pay lower taxes on the money he makes from his money than middle-class families pay on the money they make from hard work. Neither should I. We're both incredibly fortunate and we should pay our fair share.

"That's the big difference between people like Mitt Romney and me. Mitt Romney thinks he and his insider friends helped make America great, I think it's the hundreds of millions of Americans in the working class and middle class who make America great. It's these hard-working families who deserve a break and a chance to live the same American Dream as I have. That's what I'm fighting for, and that's what people like Mitt Romney have spent a lifetime fighting against."

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