Edwards Takes Stand on Tax Justice

by: david mizner

Mon Jul 09, 2007 at 13:12


John Edwards announced that he supports new taxes on hedge funds. He endorsed the so-called Blackstone Bill, which Congress is about to consider. The bill would tax hedge-fund managers' "carried interest" as income instead of capital-gains and limit their ability to avoid taxes by shifting income to offshore entities.

This may seem a no-brainer for Edwards given his longstanding committment to economic justice, but some questioned whether he would dare make the move: Edwards had a part-time gig consulting for Fortress, a hedge fund, and has received more money in campaign contributions from Fortress than from any other single entity. Taking a stand that hurts your largest contibutor: there's a word for that.

The bill would bring 4-6 billion dollars into the Treasury and has the support of Warren Buffet and Robert Rubin. But some corporate powers-that-be are warning of the bill's "collateral damage," and some Senators are reluctant to support a bill that would alienate such a cash-rich constituency. Writes John Harwood of the Wall Street Journal:

It's no coincidence that neither Charles Schumer, chairman of the Senate Democrats' campaign committee, nor Hillary Clinton, the presidential front-runner -- and the two senators from New York -- has taken a stand on hedge-fund taxation

Senator Obama has said he might support it. Another presidential candidate Chris Dodd, the chairman of the Banking Committee who has recieved more money from hedge funds than any other candidate, says he will "examine" the potential impact of the bill.
david mizner :: Edwards Takes Stand on Tax Justice

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Edwards Takes Stand on Tax Justice | 22 comments
Excellent diary (4.00 / 7)
John Edwards is right.  Once again, he leads.  Will Obama stand up to his supporters?  We saw what he did on CTL. 
Thanks (4.00 / 6)
I think in the end Obama and perhaps even Clinton support it. As I said, no less a neolib than Rubin supports it, as do some Republicans, like Grassley.

But would they be inclined to support it if Edwards weren't in the race? We'll never know, cause he's in the race, and that's a good thing.

[ Parent ]
Good Edwards diary on a great new site! (4.00 / 1)
Wow! Open Left sure started off running!
[ Parent ]
Seems good (4.00 / 5)
I noticed that he was hinting about this during the PBS "debate" the other day.  It's good to see candidates thinking about how to resolve tax inequality issues on a deeper level than just letting the Bush tax cuts lapse.
Yup (4.00 / 4)
although there's a debate to be had about Bush's tax cuts for the wealthy. Obama and Clinton would leave them in for two years before they lapsed at the end of 2010; Edwards would roll them back immediately. I think Edwards's position is much better both for economic justice and health care, which all the candidate would funds with tax increases on the wealthy.
[ Parent ]
It's a good move for Edwards (4.00 / 1)
I subscribe to the unpopular idea that corporate income tax should be eliminated entirely since it merely is passed on to the consumers anyway, and that capital gains should all be taxable to the shareholders as ordinary income.  But that's me.

But, the idea that folks like hedge fund managers, or investment brokers of all kinds who don't make anything or provide any real services except to make money out of other people's money -- almost out of thin air it seems -- should be taxed to death.  Again, your milage may vary.

I think the more people learn about hedge funds -- that there's an economic system in place that only the very wealthy can have access to -- the more likely they will be eliminated, and taxing the hell out of them is a start.

How about this? (0.00 / 0)
You raise a good point about corporations having the power to pass on their expenses to the consumer. 

How about enforcing and possibly raising corporate taxes, and proportionally lowering or eliminating personal income taxes?

I guess that it would be difficult to make that sort of indirect consumer "tax" progressive, although it could potentially be done with credits based on income levels.

[ Parent ]
Edwards is right about taxes on hedge funds (4.00 / 3)
Edwards is addressing it - It will be interesting to see which candidates will finally come around.  Thanks for the post David.

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Tax Justice... (4.00 / 2)
The term perfectly describes the issue.  Well said.  That is a big notch for Edwards in my book.
Good diary (4.00 / 2)
It's great to see that Edwards is looking at loopholes to close the loop between the haves and have nots.
It amazes me (4.00 / 3)
that this has been going on as it is.  Good for Edwards.
Great to see! (4.00 / 3)
We all know that John Edwards is the candidate for working men and women in America.  And time and again he proves to us all.
American hostility to taxes (4.00 / 2)
The average American's hostility to all taxes -- existing, proposed, or new -- has been whipped up precisely to exempt the super-rich and big business from paying their share.

While watching Michael Moore's Sicko (which had me so dismayed and disgusted, I was tempted to move to another country), it occurred to me: This knee-jerk hostility to taxes would abate if Americans actually felt they were getting something of value for their taxes.

I don't mind paying high property taxes, for example, if it results in great education for everyone, and universal health care. What people do mind is paying a ton of taxes and still having terrible local public schools, decaying infrastructure, and giant medical bills on top of that.

Reactionaries have, for their own malign purposes, created the distinct impression that government wastes our tax dollars -- and both Republican and Democratic mismanagement has helped them reinforce that impression.

Until progressives not only take power, but also shape up the system so that it delivers the benefits and services people want and expect in a timely, quality manner, the hostility to all new taxes will persist -- to the gleeful satisfaction of only the top one-half of 1% of individuals and businesses.

"Liberals feel unworthy of their possessions. Conservatives feel they deserve everything they’ve stolen." -- Mort Sahl

On this subject... (4.00 / 2)
Everyone ought to read "Perfectly Legal, the covert campaign to rig our tax system to benefit the super rich - and cheat everybody else" by David Cay Johnston.

It is outstanding.

This is a good move (4.00 / 2)
and also shows that working for Fortress and getting donations from the firm's employees doesn't mean he is beholden to them. He is able to see the bigger picture of fairness and close necessary loopholes.
Easy to take a stand (0.00 / 0)
It's easy to take a stand when you aren't careful where you lie.  Edwards has taken a stand before, on off-shore tax shelters which he opposed vocally during the 2004 election and then ends up taking a job with Fortress who were sheltering their investors' profits in the Cayman Islands.  Now he comes out with this as easily as he opposed tax shelters before. 

The following is not rhetorical: has he released the tax statements covering the time of his employment with Fortress?  I watched an old interview over the weekend he had with either Stephanopolis or Russert where he deferred simply saying how much he was paid for his services, services which he downplayed so greatly it sounded almost implausible someone would actually hire him for such general consulting.

Answer to my question (0.00 / 0)
Okay googled it myself.  Washington Post, May 17th:


  John Edwards, a trial lawyer who earned his initial fortune by defending the ill and injured in the courtroom, made $479,000 last year in salary and held more than $7.5 million in investments with Fortress Investment Group, a New York hedge fund.

Edwards has faced questions about the hedge fund -- where he said he worked only a few days a month -- because Fortress owned offshore funds that served as tax havens for investors and because the firm's portfolio included subprime lenders, which provide high-risk loans that often target minorities. As a candidate, Edwards has railed against both practices.
snip
In a recent interview, Edwards said that he provided informal advice to Fortress about political matters and that he was unaware of the firm's push into subprime lending. Subprime loans are aimed at buyers with poor credit and carry higher interest rates because of the risk.

When asked about Fortress's Cayman Islands incorporation, an Edwards campaign spokeswoman said that the former senator from North Carolina "believes offshore tax shelters are wrong" and that "as president, he will end them."

His disclosure form indicates that one of the Fortress funds Edwards reported as an asset, the Investments Fund III (Fund D) LP, was incorporated in the Caymans on Sept. 23, 2004, according to a filing the hedge fund firm made with the Securities and Exchange Commission last month.

Edwards campaign spokesman Eric Schultz said the investment should not be confused with an offshore tax haven, adding: "He pays the same taxes as if they were incorporated in Chapel Hill."

Schultz said that Edwards's Fortress work should be viewed in context: "It is true that he did consulting work for a hedge fund, part time, but it's also true that he started a poverty center at the University of North Carolina, led minimum-wage initiatives in six states, started a college-for-everyone program for poor communities in eastern North Carolina."

$479,000 for a part-time job offering informal advice on a general nature?  My God, he wouldn't have to be swift-boated by the Republicans, he's got one bought and paid sitting at his dock. 

[ Parent ]
There is part time and part time (0.00 / 0)
How about Guiliani getting $150,000 for an afternoon speech?

Or Clinton getting $8M advance for a book?

Or Walmart's CEO gets $22M as a bonus while they are cutting health care and capping salaries.

And Obama earned $991,000 in 2006 for his book.  I think that was a part time endeavor.

Join other progressives at EENRblog

[ Parent ]
And then there is part time (0.00 / 0)
I'm not really bothered by people getting paid for writing books and getting a share of the receipts.  Nor am I bothered by speaking fees, whether they be $150,000 or $55,000 unless there is something which points to a backdoor channeling or quid pro quo relationship.  I am bothered by a candidate opposed to off-shore tax havens, getting paid a large sum which doesn't seem in keeping with the general and part time nature of the job while at the same time investing 7 million with the same company, some of it taking advantage of tax shelter loopholes and then saying he didn't know.  Doesn't it bother you?  I think it's okay for us all to look at the strengths and weaknesses of all the candidates running for office. Unfortunately, no matter where he may really stand on this issue, he's got personal baggage which undercuts it in a big way.
[ Parent ]
And you are determined (0.00 / 0)
to make him wrong wherever you go.  I don't think what Edwards  has done has undercut his message in any way.  And I don't find conversations with you particularly productive since your whole mission seems to be to paint Edwards in a bad light.  Edwards is one of the finest human beings to have run for the presidency and I believe that people see that regardless of your kinds of spin.

Join other progressives at EENRblog
[ Parent ]
It comes down to work vs wealth (4.00 / 2)
  Edwards seems to think (and I agree) that work should not be taxed at a higher rate than investment income. The current tax system is backwards. Now when you earn money from a job or self-employment you have to pay the SS and Medicare taxes as well as income tax, with the Social Security tax ending at around $100K of income. Rich folks have more income as longterm capital gains or qualified dividends which are taxed at lower rates (15% rather than 25% or more).
  There are many issues involved with creating a fairer tax system. The problem with hedge fund managers is a subset of the problem of CEOs and other bigwigs taking more of their pay as stock options, so they are paying capital gains tax instead of regular income and payroll taxes.
  It is good to hear about candidates talking about this; most people find tax policy to be boring or incomprehensible so they ignore it. Meanwhile our governments need revenue to operate and provide services to the people...

I'm a Prius Progressive, not a Limousine Liberal
Good Post (4.00 / 1)
Once again Edwards leads.  As usual Edwards leads and Hillary and Obama will follow. 
Edwards Takes Stand on Tax Justice | 22 comments
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