De­cep­tive tax talk from Ed­wards

The Washington Times Weekly - - Editorials -

John Ed­wards de­liv­ered an­other of his pop­ulist speeches the other day in Iowa, where he promised ma­jor tax cuts for the mid­dle class and in­creases in health-care spend­ing while pro­vid­ing lit­tle ev­i­dence that he will have the funds to pay for them. His prom­ises have be­come so egre­gious that Robert McIn­tyre, the di­rec­tor of the la­bor-backed Cit­i­zens for Tax Jus­tice, who is sym­pa­thetic with Mr. Ed­wards’ in­ten­tions, told the New York Times that Mr. Ed­wards is be­ing “very de­cep­tive.”

Since re­cap­tur­ing power in Congress, Democrats have com­mit­ted them­selves, rhetor­i­cally at least, to pur­sue pay-asyou-go poli­cies, which would fi­nance en­ti­tle­ment-spend­ing in­creases, the ex- ten­sion of mid­dle-class tax cuts and con­tin­ued re­lief from the al­ter­na­tive min­i­mum tax (AMT) with off­set­ting en­ti­tle­ment sav­ings and/or tax in­creases else­where. Based on his pro­pos­als, Mr. Ed­wards clearly does not share this phi­los­o­phy.

For months, Mr. Ed­wards has pledged to elim­i­nate the 2001 and 2003 tax cuts for fam­i­lies earn­ing more than $200,000 per year, while ex­tend­ing Pres­i­dent Bush’s tax cuts for fam­i­lies earn­ing less than $200,000. For fam­i­lies with in­comes above $250,000, he would raise the cap­i­tal-gains tax rate to 28 per­cent, which would be 8 points above the pre-2003 level of 20 per­cent and iden­ti­cal to the top cap-gains rate fol­low­ing Ron­ald Rea­gan’s tax-re­form agenda in 1986. He also pledged three new tax breaks for the mid­dle class: a tax credit of up to $500 to match sav­ings by fam­i­lies earn­ing less than $75,000; an in­crease in the child-care tax credit, which would be par­tially re­fund­able, to pay for 50 per­cent of child­care ex­penses up to $5,000; an ex­pan­sion of the earned-in­come tax credit for work­ing fam­i­lies and a tripling of it for sin­gle adults.

“All of the steps I have pro­posed,” Mr. Ed­wards as­serted, “will raise well over $50 bil­lion a year to be rein­vested in health care, ed­u­ca­tion and other crit­i­cal pri­or­i­ties.” He has pro­posed a uni­ver­sal health care plan that he says would cost $90 bil­lion to $120 bil­lion per year, which, by it­self, is well above the rise in rev­enues he projects from his tax in­creases. But Mr. Ed­wards has made no pro­vi­sion for ex­tend­ing the tax cuts for fam­i­lies earn­ing less than $200,000, which Mr. McIn­tyre reck­ons would cost about $85 bil­lion per year. Nor has he set aside any money to ad­dress the AMT, which threat­ens to in­crease the in­come taxes for tens of mil­lions of mid­dle- and up­per-mid­dle-class fam­i­lies, es­pe­cially if the Bush tax cuts are ex­tended for fam­i­lies earn­ing less than $200,000 per year. Pro­tect­ing th­ese fam­i­lies from the AMT by in­dex­ing it for in­fla­tion would cost nearly $700 bil­lion over 10 years. Mr. Ed­wards fails to ac­count for the costs of fix­ing the AMT. As Mr. McIn­tyre would say, “very de­cep­tive,” in­deed.

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