Now is time to repeal Va. estate taxOp-Ed by Del. Ed Scott Culpeper Star-Exponent June 6, 2006
As we near the end of a special session dominated by discussions of taxes and transportation, it is important to remind Virginians of an important tax issue that has gotten little attention but has much support. Unfortunately, in the hustle and bustle of the legislative process and discussions about tax increases, talk of repealing Virginiaâ€™s estate tax can be lost.
This unfair tax, and the cost of avoiding it, promotes the sale of land devoted to farming, forestry and open space. According to the Joint Economic Committee of the United States Congress, â€œthrough 2001, 2.6 million acres of forest land were harvested and 1.3 million acres were sold each year to raise funds to pay for estate taxes.â€
The estate tax, or death tax as it is often known, takes money away from family businesses, preventing job creation and harming the ability of business owners to provide the best health insurance possible for employees. It unfairly hits minority- and women-owned businesses, robbing first-generation businesses of the ability to pass on strong and vibrant businesses to the next generation.
The House of Delegates this year once again endorsed full repeal of the death tax in a bi-partisan manner, with 93 of 100 members supporting repeal. I was pleased to co-patron this legislation. In special session our House budget (HB 5002) includes nearly $100 million in revenue reductions to address repeal of the death tax in 2007.
The Senate originally indicated support, with 24 Senators endorsing repeal early in the session. However, they fell back to a failed partial repeal version in the midst of session, presumably as a political bargaining tool to leverage compromise from the House of Delegates.
Even Gov. Tim Kaine has endorsed full repeal of the estate tax, campaigned on it last fall, and repeated his support when the House of Delegates endorsed repeal earlier this year. But he cannot sign it if legislators do not agree to send it to his desk.
When the House and Senate endorsed full repeal of the death tax in 2003 the stateâ€™s biennial budget was $60 billion. It has grown over 25 percent since then to $75 billion. In 2003, the annual General Fund budget (composed mainly of income, sales, recordation and corporate taxes) was about $12 billion. It has grown about 50% to nearly $18 billion a year. Clearly, Virginia can afford to repeal this tax to protect family farmers and small business owners.
This year is the opportune time for Virginia to repeal this burdensome tax once and for all. Most other states do not collect this tax, allowing the wealthy to avoid it by moving to Florida, Tennessee, West Virginia, or any of 32 states that do not have such a tax. However, family farmers and small business owners who are land and equipment rich but cash poor will be stuck footing the bill, even selling business assets to pay or avoid the tax.
I am hopeful the House of Delegates will prevail in efforts to protect Virginiaâ€™s economy and job creation by repealing this inequitable tax. I will remain in communication with my colleagues in both parties and both chambers urging that the death tax be repealed in Virginia once and for all.
Delegate Ed Scott, R-Madison, represents Culpeper, Madison, and part of Orange County in the Virginia House of Delegates