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Edwards Spells Out 'Tax Fairness' Strategy

by Leroy Baker, Tax-News.com, New York

30 July 2007


Democratic presidential hopeful Senator John Edwards has outlined plans to roll back tax breaks for corporations and the wealthy, and create new tax breaks that would benefit low- and middle-income families.

"Our country is divided into Two Americas – one for those at the top and one for everyone else. In the Two Americas, there is no end to the special tax breaks for multinational corporations and wealthy individuals. These taxpayers can afford lawyers to help them exploit weaknesses in the tax code and lobbyists to help them get still more tax breaks," the Edwards campaign said on its website, which coincided with a speech given by Edwards in Des Moines, Iowa on Thursday.

Edwards's tax reform plans rest on three pillars: (1) Creating three new tax breaks to reward work, saving and the family; (2) Increasing tax on high-income Americans, reversing what he called the shift of the tax code onto middle class wages; and (3) Ending special tax breaks for "insiders".

Edwards pledged that he would increase the rate of capital gains tax to 28% to ensure that high-income investors will pay taxes on their investment income at a similar rate to that paid by regular families on their earned income. He said that this would be the same level as signed into law by President Reagan, which represents a 13% increase on the current rate.

Edwards would also repeal the Bush tax cuts for the families who make more than $200,000 a year, crack down on the use of offshore tax havens, raise tax on hedge and private equity funds, and bring in a cap on executive pensions.

All this would help pay for a new Get Ahead Credit, which would expand the Savers Credit to match savings up to $500 a year, and new work bonds, which would supplement the Earned Income Tax Credit to match the savings of low-income workers up to $500 per year. He would also seek to exempt from taxes each family's first $250 in interest, capital gains, and dividends, and allow families to deposit part or all of their child tax credit into a tax-free savings account. He would also triple the EITC for 4 million adults without children, and cut the marriage penalty for 3 million families.

"It's time for us to put our economy back in line with our values," stated Edwards. "It's time to end the president's war on work. And it's time to restore fairness to a tax code that has been driven badly out of whack by the wrongheaded rules of the Washington establishment – more wealth for the wealthy and more power for the powerful. In America, when the middle-class makes money from hard work they shouldn't pay higher taxes than when the rich make money from money."


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