Democratic presidential hopeful John Edwards on Thursday unveiled a plan that would increase taxes for the wealthy and create tax breaks for the middle class.
“It’s time for us to put America’s economy back in line with our values. It’s time for us to put an end to George Bush’s war on work,” he told a packed theater at Grand View College in Des Moines, Iowa. “It’s time to restore fairness to a tax code that has been driven completely out of whack by the lobbyists in Washington, by the powerful interests in Washington and by those who value the few above the interests of many.”
He added that, “It should not be in America that the middle class carries the tax burden, and that’s exactly what’s happening.”
Edwards’ plan would fix what he called a “rigged” system by ending tax breaks to Washington insiders with wealth and corporate power. Those are the same people, he said, who keep politicians in power.
“We have crony capitalism. We have lobbyists who are there every single day working to rig the system, and it is rigged,” he said, referring to insurance, oil and drug companies.
'Get Ahead Accounts'
Among the proposals, Edwards would make long-term savings easier for low-income families with “Get Ahead Accounts” that would match savings up to $500 per year. He also would provide a tax credit he calls work bonds, which would also be matched and would go directly into savings accounts. He proposes exempting the first $250 in interest, capital gains and dividends to allow low-income families to get a start on savings tax-free.
In addition, Edwards proposed reforming the earned income tax credit for low-wage workers. He called for changing tax laws to cut the marriage penalty for up to three million families. He also wants to expand the child care credit, and allow families to use those credits to save for their future.
He said he would pay for such programs by closing loopholes and tax breaks now benefiting the wealthiest Americans.
That means repealing tax breaks for families earning more than $200,000. He also would raise the top tax rate on long-term capital gains to 28 percent — the same rate signed into law by President Reagan. Edwards said the increase would ensure that high-income investors pay taxes on their investment income at a rate similar to what regular families pay on earned income.
'Fair to working families'
Edwards promised to crack down on wealthy Americans who skirt paying their share of taxes.
He said about $300 billion a year in taxes go unpaid, and about $1.5 trillion in personal assets of U.S. taxpayers are held offshore. He said he would allow the IRS to investigate offshore tax havens, and he pledged to crack down on peddlers of tax shelters and cooperate with other countries to fight tax havens. Closing hedge fund and private equity loopholes and capping executive pensions are also part of the proposal.
While he proposes ending the estate tax for low and middle-income Americans, small business owners and farmers, Edwards wants to keep it for the few hundred thousand families with estates above $4 million in value.
By calling for tax increases for the wealthy, Edwards risks opening himself to criticism that he’s a tax-and-spender in the mold of Walter Mondale, the 1984 Democratic presidential nominee who said he would raise taxes. In the election, Mondale suffered a 49-state defeat, losing everything except his home state of Minnesota and the District of Columbia to President Reagan.
Edwards said American families are working harder but struggling to get by. He blamed globalization and technological change for stagnant wages for many workers, and said aggressive new efforts are needed to share economic growth.
“I am going to rewrite this tax code to make it fair, fair to working families, fair to people who work hard for a living, like those in Iowa so we can see all Americans succeed and see America succeed,” he said.