To the Editor:

         Enclosed is an article from your January 2009 issue of the Gazette, the letter from Mayor Mary Thun entitled  “Slight Increase in Taxes.”  The headline perhaps should have added the words “for some” or “for few.”

         I am a single senior citizen, age 85, and have lived in my home since 1971.  My property tax increase for 2009 is 16.9% and now totals $16,312.32!  Out of line!  Slight?  My income never changes.  Please pass this on to Mayor Thun.  Thank you. 

         Sincerely and upset,

         George C. Owen

         Smithtown Terrace

         Victoria, Minnesota

 

To the Editor:

         On page 13 of the January 2009 Gazette, Ethel Ausink writes about the potential impact of the so-called “Death Tax,” otherwise known as the estate tax in official terminology.

         Unfortunately, her article is missing several important facts about the estate tax and I thought your readers would like to know the entire truth.  The last sentence of her second paragraph is the kind of incomplete information that gets used by folks opposed to the estate tax to spread their message.  It may have come from the report she cited in her article, but it is still incomplete.

         Here are the full facts on the estate tax as it currently exists in the U.S. tax law (for 2009):

         *The estate tax rate of 45% applies to assets above the exemption amount of the deceased person.

         *The current amount of assets exempted from the estate tax is $3.5 million.  This means that the first $3.5 million of a person’s estate can be passed to heirs free of any estate tax.  So Ethel’s assertion that the government will get more than half the value of your home and savings at death is simply not true for 99% of the population!

         *This exemption can also be effectively doubled, with proper planning, for married couples (meaning $7 million in assets can be inherited free from estate taxes).

         *For the remaining 1% of the population who have that much value in assets, they can arrange to have those dollars transferred to charity, to other beneficiaries, or have their taxes paid via life insurance trusts and other planning devices.

         In most cases, someone who wishes to not pay any estate tax to the U.S. Government can effectively plan to donate the assets above the exemption (and certain other transferable amounts) prior to their death -- or upon their death.  This essentially makes the estate tax an optional tax that ends up being paid via insurance proceeds or assets that have been earmarked by the estate for paying the taxes owed.

***

         However, even though it could be considered optional, the estate tax still generates $25 to $50 billion per year in tax revenue.  In these days of ever-increasing budget deficits in Washington, I would think the last thing anyone really wants is to spend more tax revenue for the benefit of the wealthiest 1% of the population, especially when they can plan whether or not to pay the tax.

         The biggest problem with the estate tax isn’t that it might cause your heirs to lose the family home, farm, or business; it most likely won’t.  The problem is that the law keeps changing so that it makes it difficult for seniors and their advisors to properly plan for the passing of assets from generation to generation.

         For instance, the current law also includes a 0% estate tax in 2010, but then the law calls for a “snap-back” to the law in place in 2001.  That law means a top estate tax rate of 55% and an exemption of $1 million beginning in 2011. 

         I do agree with Ethel in that we should all communicate with our elected representatives (our U.S. Senators and Representative John Kline) and let them know that laws should be designed like this.  Washington needs to get its act together and pass a reasonable form of estate tax that won’t further bankrupt our government, yet won’t affect most of our population.  This can be done and, in fact, several bills have been introduced in 2800 to do this.  Hopefully the new Congress can show some responsibility and get it done.

         Scott T. Rollin, Founder & President

         Management Compensation Resource

         Edina, Minnesota

 

EDITOR’S NOTE:  I agree with Ethel Ausink that the Death Tax should be permanently repealed.  It’s unfair in any amount,  no matter who is forced to pay it.  Thank you for writing the Gazette.

 

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