Sunday, August 24, 2008

MN-01 : Dr. Davis Tax Policy – Fighting for the Fortunate 230

According to Jim Nussle, director of the Office of Management and Budget, the federal deficit will hit a record $482 billion in 2009. Last February, the administration forecasted a deficit of $407 billion but the weakening economy, unwise economic stimulus program, and the Iraq War, have blown that plan out of the water. The National Debt is now in excess of $9.6 Trillion.

Nobody wants to pay taxes, but if you want a civil society ( your definition can be as minimal as just a national defense and a local police function all the way to a full socialist state), taxes must be paid. So the real question should be, what is a Fair Tax system ?

The next Congress and President will address this question including whether to make the temporary tax cuts from 2001 and 2003 permanent after 2010.
One tax that will be included is the Federal Estate Tax.
In 2004 and 2005 estates worth up to $1.5 million (or $3 million for estates owned by a married couple) were exempt from the estate tax.
Since then, the exemption has increased to $2 million ($4 million for married couples).
Under the Bush tax cuts, those rules are scheduled to change to allow even more estates to escape the tax as in 2009 the exemption will increase to $3.5 million ($7 million for married couples).
In 2010 the estate tax will disappear entirely --- a one year “freebie”.
Under current law after 2010, it will return to the 2001 levels in 2011 --- taxing estates worth over $1 million.

Tax policy should be an important factor in determining who gets your vote.

In Minnesota’s First District, Dr. Brian Davis has offered little information on specific taxes, but has issued an opinion on the Federal Estate Tax.
“Estate and Capital Gains Tax Policy - The current estate tax that is scheduled to increase on January 1, 2011 will place a tremendous financial burden on families who wish to pass down a farm from one generation to the next, particularly in the current setting of increased land prices where it is difficult to start a farming operation. Likewise, expiration of the capital gains tax rates and their subsequent increase pose an excessive tax burden which will be placed on farmers choosing to sell property and assets. Brian Davis wants to promote an environment where young farmers can continue the family business. Congressman Walz's positions on these tax issues are not helping farmers transfer their assets to our next generation of farmers or to realize the equity built up from years of hard work.

Sounds like Dr. Davis is raising a serious concern, but is it ?

Citizens for Tax Justice reported the number of Federal Estate Tax filings for Minnesota in recent years was :
2000 – 672
2002 – 740
2004 – 466
2005 – 203
2006 – 230
The obvious result is that the Federal Estate Tax continues to have no effect on the vast majority of Americans and clearly benefits only the very wealthiest families in America.

Why is Dr. Davis, the Reluctant Millionaire, trying to confuse the voters with this issue ?
The easy answer is that it is one of the best ways to scare voters …. “My opponent will raise your taxes … I won’t”.

Dr. Davis may be painting an image of someone trying to protect those small family farms, but Congress will be influenced by the next President. With a veto power, the President will have more of an impact than the Congressman representing Minnesota’s First District.
The Committee for a Responsible Federal Budget has issued a report, A Fiscal Voter Guide to the 2008 Election, evaluating the major party’s nominees :
Senator McCain supports a permanent estate tax with a $5 million exemption ($10 million per family). The estimated impact is $10 billion.
Senator Obama would instead freeze the estate tax at its 2009 levels. This would create a permanent estate tax a $3.5 million exemption ($7 million per family). The estimated impact is $44 billion.

Davis is offering a charade (much like his “Drill here, Drill now” charade).

Tax fairness and the National Debt are issues … focusing solely on the Federal Estate Tax is insult to the voters.

On September 9th, voters will have a chance to vote in the Republican Primary to determine who will be on the November ballot. Davis is a neophyte that is playing on emotional issues and has never held any elective office. Contrast that with State Senator Dick Day who is in his sixth term having been first elected in 1990 where he has held leadership positions. His experience in the give-and-take necessary to move legislation forward in the areas of taxes (as well as the issues related to transportation, education, agriculture, etc.), should be weighed carefully by those primary voters.

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