John Edwards and the War on Work

With a style reminiscent of Huey Long and other populists who have gushed rhetoric about the evils of capital and wealth, John Edwards has called our tax code a “war on work.” Here it is in a nutshell from the Edwards08 website:

“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.”

Usually “money from money” refers to interest, but interest is already taxed the same as wages, so he must mean dividends and capital gains which are taxed at a lower rate.

So we would expect Edwards to advocate taxing dividends and capital gains as if they were wages, but he recently proposed a more detailed tax plan than any other presidential candidate, and it includes ……drum roll please …… a 28% rate for capital gains. That’s high but still lower than the rates on wages.

Why didn’t he just propose taxing dividends and capital gains as wages and interest? It’s hard to guess. The Edwards rhetoric on the economy has been so emotionally charged and factually challenged that it’s hard to know.

Here’s a recent report explaining in plain English why the U.S. has, quite sensibly, had a special, lower rate on capital gains for all but two years since 1913.