Edwards Presents Plan To Increase Taxes

DES MOINES, Iowa — Democratic presidential hopeful John Edwards yesterday unveiled a tax plan that would increase taxes on those in the upper brackets and create tax breaks for the middle class.

"When our middle class grows, our whole economy grows," he said in Des Moines.

Mr. Edwards said his plan would also end tax breaks to what he called Washington insiders. "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," he said.

Among the proposals, Mr. Edwards would make savings easier for low income families with a "Get Ahead" credit that would match savings up to $500 per year, and provide a tax credit he calls work bonds, which would also be matched and would go directly into savings accounts. He also proposes exempting the first $250 in interest, capital gains, and dividends to allow families to get a start on savings tax-free.

In addition, he wants to reform the earned income tax credit for low-wage workers. He proposes expanding the child care credit and allowing families to use those credits to save for their future. Mr. Edwards also wants to change tax laws to cut the marriage penalty for up to three million families.

Mr. Edwards said he wants to take pressure off middle class wages by requiring greater contributions from high-income Americans.

That means repealing tax breaks for families earning more than $200,000. He also would raise the top tax rate on long-term capital gains to 28% — the same rate signed into law by President Reagan. Mr. Edwards said the increase would ensure that high-income investors pay taxes on their investment income at a rate similar to what regular families pay on earned income.

Mr. Edwards promised to shut down loopholes for wealthy Americans who try to skirt paying their share of taxes.

He said about $300 billion a year in taxes go unpaid, and about $1.5 trillion in personal assets of U.S. taxpayers are held offshore. He said he would allow the IRS to investigate offshore tax havens, and he pledged to crack down on peddlers of tax shelters and cooperate with other countries to fight tax havens' efforts to undercut other nation's tax bases. Closing hedge fund and private equity loopholes are also part of the proposal.

Mr. Edwards said American families are working harder but struggling to get by. He blamed globalization and technological change for stagnant wages for many workers, and said aggressive new efforts are needed.

He also criticized corporate interests and said they "have never been stronger than they are in George Bush's Washington today." "Drug and insurance companies write our health care laws, oil companies, and power utilities write our energy laws and big banks write our lending laws," Mr. Edwards said.