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…"