Legislation (SB 504) calling for full repeal of the death tax will go before the House Finance Committee on Monday morning at 8:30 a.m. in House Room D. We anticipate the House Finance Committee will support the subcommittee recommendation to FULLY repeal the death tax in 2007.

A vote by the full House of Delegates should take place later next week, with the approved legislation returning to the Senate the following week. At that point, SB 504 will likely be referred to a conference committee for their consideration unless the full Senate agrees to the House amendments calling for full repeal of the death tax.

Wednesday, the House Finance Subcommittee chaired by Delegate Bob Purkey, amended SB 504 (Norment) to conform with HB 40 (Tata) which calls for full repeal of the Death Tax effective January 1, 2007. Senator Norment came to the committee himself and asked that the House remove the flawed Senate provisions and re-institute full repeal of the death tax on his bill.

Virginians for Death Tax Repeal applauds Delegate Purkey and members of the Subcommittee for taking clear action by correcting the flawed partial repeal language in SB 504, as adopted by the Senate.

It is important for coalition members to express their concerns to Senators about their concerns about partial repeal. Otherwise, they may feel that they have helped us, even though they have not.

Some of the more serious flaws in the Senate version of the bill include:

-Partial repeal would exhaust resources and capital from family farmers and small business owners as they hire attorneys to pursue tax avoidance policies and incur the cost of tax related insurance plans.

-Partial repeal would encourage the wealthy to buy working farmland and allow their heirs to sell it for residential and commercial development.

-Partial repeal would establish Virginia as the primary defendant of lawsuits regarding death taxes because exemption language departs radically from the federal calculation.

-Partial repeal would drain state regulatory and enforcement resources.

-Partial repeal would encourage tax flight by those with means seeking shelter in states without a death tax.

-Tax flight carries a greater consequence with impact on income tax revenue, capital investment, charitable giving and volunteerism.

-Partial repeal with a $10 million cliff means that growing businesses will suddenly be vulnerable to this tax in the coming years as they grow.

-Partial repeal clauses for "working farms" and "closely held businesses" are so narrowly drawn that not a single business in Virginia could be identified that would be affected according to the Department of Planning and Budget in 2004.

-Governor Kaine promised to phase out the death tax and conform Virginia to federal law. Amendments made to SB 504 move us further away the WRONG way from the federal law.

-Further, the Wills, Trusts and Estates Section of the Virginia Bar Association expressed concerns regarding partial repeal legislation. They stated that partial repeal is "unusual and perhaps arbitrary."