At times, it seems like you can measure the policy differences between Democratic presidential contenders in microns. “My opponent says alternative energy is super. Well, I think alternative energy is super-duper! He wants troops out of Iraq today? Well, I want them out this morning!”
But they might just be having a slightly more substantive disagreement… on tax hikes.
Democratic presidential hopeful John Edwards said yesterday raising taxes for higher-income families back to their levels under the Clinton administration is a floor, not a ceiling, and he would consider even higher tax increases.
“What I believe is the starting place is to go back to the Clinton levels,” Mr. Edwards told reporters after addressing the 2,000 delegates to California’s state Democratic Party convention.
The Los Angeles Times gives a smidgen more detail of the additional taxes that Edwards would want to create:
Speaking as state party activists wound down their three-day convention in San Diego, the North Carolina Democrat told reporters that “paying additional taxes, an excess-profits, excess-income tax” was a notion “worthy of consideration.” He did not offer specifics.
Bill Richardson went after Edwards:
He also disagreed with Mr. Edwards on taxes, saying he is proud to be a tax-cutting governor and arguing that Democrats are often too quick to turn to tax increases. “Whenever we have solutions, we want to tax,” he said in his own press conference after his speech. “I’m different.” … And he said taking care of the deficit is a top priority.
But Mr. Edwards said that’s not his top priority.
“I believe it is more important to bring about the transformation,” he said, pointing to his universal health care plan, achieving independence from foreign energy and reducing global warming emissions. “Some people believe it’s more important to push those things off and reduce the deficit — the deficit’s the priority.”
Edwards’ call sounds a bit like Hillary’s “I want to take those profits” line.
UPDATE: It might be a good time to brush up on what happened the last time Congress enacted a Windfall Profits Tax. The Tax History Project tells the story, and Ben Lieberman at the Heritage Foundation laid out its flaws. A good summary of why it was repealed:
It had proven to be a heavy administrative burden, both for taxpayers and the IRS. Oil industry representatives claimed annual compliance costs of $40 million to $50 million. Press reports suggested the IRS was spending as much as $15 million to collect the tax. Overall, it was a heavy cross to bear, complained oil executives. In 1984 a General Accounting Office report called the WPT “perhaps the largest and most complex tax ever levied on a U.S. industry.”
Worse, the tax had yielded less revenue than anticipated throughout its existence — and none at all in its later years. Oil prices had failed to continue their dramatic rise; between 1980 and 1986, they had fallen from $30 to just $10 per barrel. Meanwhile, the WPT’s “base price” — used to calculate tax liability — had continued to rise with inflation, as required by law. Squeezed from both sides of the equation, the tax had become a negligible source of revenue.
In its eight years of existence, the WPT raised $79 billion in revenue, the CRS later reported. But since those payments were deductible against income, affected companies enjoyed a lower burden under the regular corporate income tax, effectively reducing the net yield to about $40 billion — a far cry from early hopes.
Of course, with no real specifics — what would an “excess income tax” be? — we don’t know how Edwards’ proposal might differ from the earlier disappointing experiment.