John Edwards: Robbin' tha Hood
John Edwards had found the best way to get attention off his head and onto the presidential race: become the modern day Robin Hood.
Edwards made an announcement late Thursday night that he would "rewrite our tax code to make sure it is fair." While most politicians, policy makers, tax experts, and lawyers have struggled to define what — exactly — a fair tax code is, it appears Edwards has come to some dramatic conclusion; a conclusion that seems to have eluded everyone else. Fair, for Edwards, is to increase the tax rate on capital gains from the current 15 percent to 28 percent on those who earn over $250,000. If you stand only to make $249,000, do not fear — you are not actually rich and only will be forced to give away 15 percent. Further:
Mr. Edwards repeated his calls to repeal the Bush tax cuts for families with incomes over $200,000 and to raise taxes on hedge fund and private equity managers. And he said he would “declare war” on off-shore tax shelters and put limits on executive compensation.
His goal is to win support by advertising programs he couldn't instate to make income to fund the other programs he has in mind.
Mr. Edwards said the revenue gained from these tax increases would pay for a variety of tax cuts aimed at middle- and lower-income people, including exempting the first $250 of investment income from capital gains taxes, expanding the earned-income and child and dependent care tax credits, setting up special tax-free savings accounts of up to $500 a year and a program where the government would match the first $500 in savings.Mr. Edwards would eliminate taxes on estates less than $4 million. Republicans are pressing for a permanent total elimination of the federal estate tax. Under current law, estates valued at less than $2 million per couple are exempt from taxation. The exemption gradually increases to 2010, when it is eliminated. But unless the Bush tax cuts are extended by a future Congress and president, the estate tax would be reinstated in 2011.
Why haven't the other presidential nominees considered such a sure-to-be-popular program? Aside from Edwards' dubious definition of "fair," there is justified concern amongst policy analysts that his program is, well, not possible. His calculations for profit assume that the next Congress will maintain the Bush tax cuts on families with incomes under $200,000.
Unfortunately, that assumption is not shared by other analysts:
Robert S. McIntyre, director of Citizens for Tax Justice, a labor-backed group whose calculations are widely respected by tax experts, said that if the cost of extending tax cuts for people earning less than $200,000 was added to the calculation, the plan would create a $35 billion revenue shortfall instead of the extra $50 billion predicted by the Edwards campaign.
“John Edwards is trying to do something nice for low-income people,” Mr. McIntyre said. “The question is whether he has a way to pay for it. He is repealing tax cuts on the rich that really do not exist and the only part of substance is that he is expanding the Bush tax cuts to everyone else, but doesn’t count it. I don’t want to go overboard in the criticism, but this is very deceptive.” "
Edwards is struggling, and the Robin Hood concept is an easy out. Unfortunately for voters, he will have to do a little more work to define "fair tax code" and come up with a program with true potential.
-Kristin Linder
