Following this morning's report in The Washington Post that the Senate is unlikely to pass a tax hike on private-equity firms, Barack Obama and John Edwards are both trying to use the issue to differentiate themselves from Hillary Clinton, the Democratic front-runner.
Critics of the current tax structure for private-equity outfits say such firms benefit by having some of their earnings taxed as capital gains instead of income -- a far lower rate. But the industry has battled a tax overhaul mightily, saying it would damage the economy. For now, it appears they've succeeded.
Even though Clinton, too, favors the tax hike, Obama and Edwards used the opportunity to pounce on what they see as a liability of Clinton's. Obama seized on Clinton's recent remarks that lobbyists "represent real Americans."
"If there was ever a doubt that Washington lobbyists don't actually represent real Americans, it's the fact that they stopped leaders of both parties from requiring elite investment firms to pay their fair share of taxes, even as middle-class families struggle to pay theirs," he said in a statement, promising to "close tax loopholes for big corporations, provide 90 percent of working Americans with a tax cut, and pass the strongest lobbying reform in history."
Edwards, in another thinly veiled reference to Clinton, who has touted her many years of experience in Washington, said, “We can’t just trade corporate Republicans for corporate Democrats ... This is a perfect example of why we need to change the way Washington works, and why we need tax fairness so hedge fund millionaires don’t pay taxes at a lower rate than middle class families.”