Building One Economy With Tax Reform To Reward Work
"The engine of our economy is not Washington, D.C., or 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 trying to do right by their families. When our middle class grows, our whole economy grows." - John Edwards
In America today, families are working harder and struggling to get by, while powerful special interests in Washington are doing better than ever. Income inequality is at its greatest level since 1928. But the number of Washington lobbyists has tripled to 36,000 since 1996, more than 60 for every member of Congress. Our tax code is the perfect example of the Two Americas - one for the wealthiest Americans and Washington insiders, and the other for everyone else. John Edwards believes that wholesale changes are needed to put our economy and our tax system back in line with our values. [Pew, 2007; Saez, 2007; SOPR, 2006]
Three New Tax Breaks to Strengthen the Middle Class
While the tax code favors wealth over work, regular families struggle to save and pay for necessities like child care. Only 27 percent of households within 20 years of retirement have adequate retirement savings. Child care costs more than a rent for a family with two children. A single worker at the poverty line pays more than $800 in federal income and payroll taxes. [EPI, 2006; NACCRRA, 2006; CBPP, 2006]
Edwards will overhaul the tax code with new tax breaks to strengthen the middle-class pillars of saving, work, and family:
* Savings: A new "Get Ahead" tax credit to match up to $500 a year in savings for families earning up to $75,000 - that could be used for retirement, college education, buying a home, investing in a small business or during a financial or medical emergency, and new "Work Bonds" to offer additional targeted savings incentives for low-income families.
* Families: Expand the Child Care Credit to pay up to 50 percent of child and dependent care expenses up to $5,000 and make it partially refundable, and allow stay-at-home parents to help pay for child care for newborn infants.
* Work: Triple the Earned Income Tax Credit for single adults and cut the marriage penalty.
Reverse the "War On Work"
Nothing better reflects the problems with our tax code than the lower tax rates for capital gains. As Warren Buffett says, there is something wrong when he pays taxes at a lower rate than his secretary. As president, Edwards will:
* Raise the tax rate on capital gains to 28 percent for the most fortunate taxpayers - taxing the investment income of the wealthiest Americans similarly to the wages of the middle class.
* Repeal the Bush tax cuts for the highest-income households and keep the tax on very large estates (above $4 million for couples).
* Declare war on offshore tax havens by cracking down on tax shelter promoters, cooperating with allies to fight tax havens, and closing the "tax gap" by improving IRS customer service, simplifying tax filing, auditing more large corporations and high-income individuals and requiring more third-party reporting.
* Close unfair loopholes like the tax breaks for hedge funds and private equity fund managers and unlimited executive pensions.