Culpeper Delegate Ed Scott had this op-ed published in the Culpeper Star-Exponent this week. We hope state budget negotiators read it and agree to find a way to repeal the death tax fully this year.

Now is time to repeal Va. estate tax

Op-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 Virginia'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, "through 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."

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 state'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 Virginia'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

Please make contact this weekend by email with your legislators urging them to include repeal of the death tax in the final state budget deal. We expect that something will develop in the next ten days to two weeks, if not much sooner, that will bring to a close discussions of a state budget and bring to a close, possibly forever, efforts to repeal the death tax, either successfully or unsuccessfully.

Despite inaction by the US Senate mentioned below, it is imperative that Virginia pass FULL and not PARTIAL repeal. Problems with partial repeal can be seen here, but it would make Virginia's one of the oddest laws in the nation with regards to estate taxes, and still would hinder family farmers and small business owners.

Governor Kaine endorsed full repeal of the death tax often last fall and again this Spring after taking office. Urge him to support efforts for full repeal of this tax that burdens family farmers and small business owners.

The House of Delegates endorsed full repeal of the death tax every year since 2003.

The Senate of Virginia has endorsed full repeal in the past, when our state budget was much smaller and the cost of repealing the death tax was even greater. Senator Tommy Norment has been the leading Senate patron. Senate budget conferees Walter Stosch and Edd Houck have been long time proponents of repeal and should be urged to continue their efforts.

This year clearly is the year to repeal the death tax. Please make an effort to contact your elected officials Governor Kaine as well as your senator and delegate to once again urge them to repeal the death tax.

You can reach the Governor, your legislators, and the budget conferees, by clicking here.

As the debate over death tax repeal continues in Virginia through state budget negotiations, the issue is also being discussed at the federal level.

This week, the US Senate took up the matter of making permanent the full repeal of the federal estate tax. Earlier this spring, the US House of Representatives overwhelmingly passed legislation calling for full repeal of the unfair death tax and since have been waiting for their colleagues in the Senate to take action.

On Thursday, the U.S. Senate rejected an effort to permanently repeal the federal death tax. The Senate lacked just three votes to reach the 60 votes necessary to cut off debate and move to consider the repeal measure.

"The 'death tax' is an unfair burden inflicted upon America's small businesses, farmers, and families during a time of grieving and pain," said Senate Majority Leader Bill Frist (R-Tenn.), "This won't be the last time this year the Senate votes on this important issue."

Click here to see stories on the federal repeal effort

Death tax repeal remains a matter for discussion during ongoing state budget negotiations among conferees of both chambers. However as the state quickly approaches the end of the fiscal year (June 30) without a budget agreement, questions have arisen about how the state will operate following budgetary inaction by the legislature. Among them, what are the powers of the Governor if Virginia faces a shut down of essential services?

According to Governor Kaine he has the authority to "keep the doors of government open" if the General Assembly does not pass a biennial budget into law before the deadline. But, according to an advisory opinion issued by Attorney General Bob McDonnell on Thursday, the governor does not have the constitutional ability to spend state funds that are not appropriated by lawmakers.

Aside from differing opinions of executive authority, and in possible anticipation of no budget agreement being reached by the General Assembly before July 1, legislation in the form of a continuing resolution has been discussed that would grant the governor authority to maintain state operations during continued budget negotiations. This continuing resolution would extend current budget appropriations for state agencies into the next fiscal year to avoid a potential shut down.

Click here to go to our website and see some of the stories on this development.