Senator Dayton on the Bush Tax Cut Plan

Senator Says Bush Plan Drives Up Deficits to Benefit Wealthiest Americans

January 7, 2003

WASHINGTON, DC - Saying that new tax cuts should be targeted to the millions of low- and middle-income families who have been hit hardest by the current economic downturn, Senator Mark Dayton today introduced a tax plan to cut taxes for farmers, small businesses and working Americans, curb corporate tax abuses, and freeze rates for the wealthiest earners at current levels.

Dayton released the following statement on his "Fair Tax Cut" plan:

"The tax and economic stimulus proposals which President Bush outlined yesterday offer relatively little tax relief for most Minnesota families and almost no help with our state's budget crisis. Only 15 percent of the President's package, which will eventually cost the federal Treasury $674 billion, would take effect this year to help stimulate an economic recovery. Thus, his package is really more of a re-election stimulus than an economic recovery stimulus.

"The effects of the President's proposals after the 2004 election will be to further undermine the country's financial strength just as the "Baby Boom" generation begins to retire in unprecedented numbers. In just two years, the Clinton federal budget surpluses have been replaced by huge annual deficits, which will require spending all of the Social Security Trust Fund surpluses and then borrowing an additional $1 trillion to $2 trillion during the coming decade. Under these conditions, the President is cavalierly proposing another tax reduction!

"Like his earlier tax proposal, this one would move our country further toward a society in which the richest Americans pay relatively little in taxes, while the rest of Americans, almost everyone earning less than $120,000 per year, will face increasing burdens. It would also become a society in which, beyond a strong national defense, the federal government would do as little for people as possible.

"Once again, the President's tax cut proposal favors the richest Americans over everyone else and provides short-term tax benefits at dangerous future costs. This proposal adds a new bias: It favors unearned income - income produced by wealth - over earned income - income produced by work. And it again calculates that giving many American taxpayers small tax cuts will provide the political support for giving enormous tax breaks to the few richest taxpayers.

"Additionally, his proposals continue the deconstruction - leading ultimately to the destruction - of America's economic foundation and social cohesion. They pander to the hatred of all taxes and the obsession to avoid paying any of them. They embellish the prevailing prejudice that government is America's domestic 'axis of evil.'

"Finally, the President's proposals would provide almost no help to Minnesota with its severe budget crisis. It offers nothing that the federal government could do, like additional highway funding; nothing that it should do, like helping states pay for rising health and nursing home costs for the elderly; and nothing it has previously promised to do, like paying for 40 percent of the costs of special education. Fulfilling that promise alone would provide Minnesota with about $600 million in additional education funding during the next biennium, which would erase over 13 percent of the state's projected budget deficit.

"My tax plan and the other proposals I will introduce over the next ten days would provide more benefits to Minnesota - our state and our citizens - than the President's. It would put the federal government on Minnesota's side in resolving its current fiscal crisis, rather than on the sideline. My tax proposal would provide more tax relief to most families with annual incomes below $120,000 at much lower costs to the federal Treasury.

"The centerpiece of my "fair tax cut" proposal is a doubling of the ten percent tax bracket to $24,000 for joint filers and to $12,000 for individuals. That would provide an additional tax cut of up to $600 for couples and $300 for individuals. I would freeze the top tax brackets at their current levels. I would not eliminate the estate tax in 2011 but, rather, immediately increase the individual exemption to $4 million, lower the rates, and completely exempt family farms and small businesses. I support the President's acceleration of the child tax credit, his elimination of the marriage tax penalty, and temporary fix of the Alternative Minimum Tax. However, I would not exempt dividend income from taxation, because, among other reasons, well over half its benefits would go to the wealthiest one percent of taxpayers.

"My 'Fair Tax Cut' proposal would cost the federal Treasury about $90 billion over the next decade, compared with the President's $674 billion price tag. More tax relief for most Minnesotans at a fraction of the cost. I consider that a trifecta, and the winnings all go to Minnesota!"