Edwards's Tax Plan Focuses on Low, Middle-Income Families

[JohnLocke]

Edwards's Tax Plan Focuses On Low, Middle-Income Families
By Deborah Solomon--Wall Street Journal
Thursday, July 26, 2007
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WASHINGTON -- Democratic presidential candidate John Edwards said he would raise the capital gains tax rate to 28% from 15% and boost income taxes on those making more than $200,000 a year in order to finance tax cuts and other benefits for middle- and lower-income families.

The tax proposal lays down a big marker in the 2008 campaign tax debate and is likely to spur Mr. Edwards's main rivals for the Democratic nomination, Sens. Hillary Clinton of New York and Barack Obama of Illinois, to detail their tax prescriptions in the coming months.

So far, Mrs. Clinton and Mr. Obama have said only that they favor rolling back at least a portion of the Bush tax cuts that favor upper-income families, though Mr. Obama's aides have said he's considering raising the capital gains rate to 20%.

Mr. Edwards, a former senator from North Carolina and the Democrats' 2004 vice presidential nominee, is the first to detail how he would use additional tax revenues. His populist economic campaign has focused on the anxiety among many U.S. workers that the economic boom is leaving them behind.

In a speech in Des Moines, Iowa, Mr. Edwards said Bush administration's tax policies rewarded wealth over work, and he pledged to rewrite the tax code to benefit Main Street over Wall Street. "The great engine of growth in America isn't the special interests or the money managers; it is the teachers and factory workers and engineers who quietly contribute every day," he said.

(...)

Mr. Edwards' remedies include a series of tax credits and savings incentives to help lower-income families generate wealth, including a dollar-for-dollar government match -- up to $500 a year -- for families with incomes of as much as $75,000 who use the money for such things as college, a home or retirement. Lower-income families would be eligible for another $500 in government match money and the first $250 in investment income would be tax-exempt for all families.

The Edwards plan would also expand the childcare tax credit to cover up to 50% of childcare expenses up to $5,000 and expand the earned-income tax credit, which provides tax refunds to low-income workers without children.

Campaign aides said the expanded childcare and earned-income tax credits and the dollar-for-dollar savings incentive would cost about $30 billion a year and would be financed by the capital gains increase. Other portions of the plan would be financed with $50 billion the Edwards campaign predicts it will get by closing tax "loopholes," such as going after offshore tax shelters and increasing the taxes paid by hedge fund and private equity managers. Mr. Edwards plans to use the revenue raised from repealing the Bush income tax cuts to help finance his health care plan.

Political observers said the proposals are a clear attempt to help quell anxiety among voters about stagnant wages and the concentration of income among the richest Americans but said it's unclear how easy it will be to implement the ideas. Many low-income families who qualify for tax credits often don't take them because of the complexity involved in preparing tax forms.

"It's obvious that Edwards is thinking about issues that are at the core of what American families care about, health and kids and savings and things like that but we already have a very complicated tax system and to a large extent these proposals would layer even more on top of that system," said William Gale, a senior fellow at Brookings Institution.

(...)

http://online.wsj.com/article/SB118548333453979331.html?mod=googlenews_wsj

[draft_mario_cuomo]

1. K & R nt

[JohnLocke]

2. Kick (nt).

[goodhue]

3. .

[1932]

4. "Many low-income families who qualify for tax credits often don't take them "

Last April, Edwards said that the government has all the information it needs to calculate taxes for the vast majority of taxpayers (because all their income is already reported to the government) and for them he proposes a new one-page tax form where you sign off on the calculation the government makes for you. (This is basically what happens in the UK.)

I assume that most of these credits will apply to people who fall into this category of taxpayer, and the government can give them the credits automatically.