Though he’s stuck, for now, in third place in the national polls, John Edwards has set the tone for the Democratic presidential race over the past few months. When Edwards apologized for his 2002 vote to authorize force in Iraq, some Democrats called for Senator Hillary Rodham Clinton to do the same. When Edwards proffered an ambitious universal health-care plan, critics pointed out that the health-care ideas that Clinton and Senator Barack Obama have floated don’t quite measure up. Now Edwards has unveiled a tax-overhaul proposal that’s just as detailed and universal as his health-care plan. Will Edwards’s blueprint set the new Democratic standard, or will his fellow mainstream candidates immediately reject much of it as bad for the American economy, and bad for Americans—rich, middle-class, and poor?
In announcing his “Building One Economy” plan last Thursday in Des Moines, Edwards said that “the engine of our economy is not in Washington . . . or [on] Wall Street. It is the tens of millions of men and women in offices, factories, and fields across America who go to work every day.” To help these men and women, Edwards wants to restore “fairness” to the tax code and end what he calls the Bush administration’s “war on work.” He’d do so by nearly doubling the tax rate on investment gains for American families earning more than $250,000 annually—from today’s 15 percent to 28 percent, or 40 percent higher than it was during the investment boom of the Clinton years. He reasons that “high income investors [should] pay taxes on their investment income at a similar rate to what regular families pay on their earned income.”
Edwards also would force hedge-fund and private-equity-fund managers to pay tax on their investment gains at the regular income-tax rate, rather than the lower capital gains rate, so that they’d give 39.6 percent of this income back to the government. And he’d repeal Bush’s across-the-board income-tax cuts for families earning above $200,000 a year, ensuring that they pay 39.6 percent of their taxable income to the feds, too, instead of today’s 35 percent.