Bipartisan Support for Repeal in House Finance Committee

In a show of bipartisan support, the House Finance Subcommittee chaired by Delegate Bob Purkey voted unanimously in favor of HB 40, sponsored by long time advocate of small businesses and family farmers, Delegate Bob Tata.

Delegate John Welch (Chief Co-Patron of the bill), Delegate Kathy Byron, House Democrat Leader Frank Hall and Delegate Lynwood Lewis all supported efforts to fully repeal the unfair tax. Similar legislation that offered repeal with a delayed phase out was introduced by Delegate Ward Armstrong. Del. Armstrong's bill was "rolled in to" Delegate Tata's bill, and we acknowledge him for his efforts on this issue. Under Tata's bill that we are working towards, the death tax will be eliminated effective January 1, 2007. The fiscal impact for the biennium will be roughly $100 million.

The bill will now be reported to the full House Finance Committee for consideration. From there, it is likely to go before the House Appropriations Committee for their consideration and, hopefully, adoption. The legislation is anticipated to move for a vote of the full House of Delegates within the next few weeks.

Current Death Tax Repeal Legislation

HB 40 Estate tax; conformity of state and federal statutes.
Robert Tata
Status:

01/18/06 House: Assigned to Finance sub-committee: #2 (Purkey) (Favorably reported to Committee on Finance)

SB 504 Estate Tax
Thomas K. Norment, Jr.
Full text:
01/11/06 Senate: Prefiled and ordered printed; offered 01/11/06 067012780
Status:
1/11/2006 Senate: Referred to Committee on Finance

SB 140 Estate tax
Jay O'Brien

Full text:
01/10/06 Senate: Prefiled and ordered printed; offered 01/11/06 066056784
Status:
1/10/2006 Senate: Referred to Committee on Finance

SB 659 Estate tax
Ryan T. McDougle
Full text:
01/18/06 Senate: Presented and ordered printed 062222766
Status:
01/18/06 Senate: Referred to Committee on Finance

Senator Devolites Davis and Delegate Cox Discuss Repeal of Death Tax Following the State of the Commonwealth

Monday evening, Senator Jeannemarie Devolites Davis (R-Fairfax) and delegate M. Kirkland "Kirk" Cox (R-Colonial Heights) offered the Republican perspective on the State of the Commonwealth following Governor Tim Kaine's address to a Joint Assembly of the Virginia House of Delegates and Senate of Virginia. An excerpt of remarks made regarding the death tax is below:

Delegate Cox on the death tax:

"With record budget surpluses, we look forward to working with Republicans, Independents and Democrats - as well as the Governor's Office - to enact real tax relief.

For example, we will eliminate the "Death Tax" so that family farms and businesses do not have to be sold off to pay the taxes."

Senator Jeannemarie Devolites Davis on the death tax:

"In the new budget there is no desire to start expensive new programs which will drive up the cost of future budgets. There is a strong desire to put an end to the death tax and many want a back-to-school sales tax holiday."

Other States Working to Repeal Death Tax

A number of states across the country are working to repeal their state death taxes. Notably, just across the Potomac River, Maryland is considering repealing their tax, and providing an economic incentive for tech companies and homeland security companies that are driving the Virginia economy in Northern Virginia to relocate just over the line into Maryland.

More Reasons for Repeal

Action by the 2006 General Assembly to repeal the Death Tax in Virginia will help preserve open space and protect farmland from development.

The heirs of individuals owning valuable Virginia farm land and undeveloped real property will face significant Virginia estate taxes. These heirs may be forced to sell the Virginia real estate to raise cash to pay Virginia estate taxes. When the heirs sell the Virginia real estate, the heirs may not be able to afford to place an open space conservation easement against the property and will be forced to accept the highest price for the property. Land that was once open space or a family farm could be bought and sold to the highest bidder for residential or commercial development, with the heir choosing to liquidate the Virginia real estate just to satisfy the state tax collector.

This concern is real and has drawn attention from conservation and environmental groups. Death tax repeal would give individuals reason to keep their estate in place and not pursue land investment options simply to cover the cost of their state tax bill.

Notable Remarks

"Saving family farms will be the standard by which I will judge my administration's efforts in agriculture," he said. "We cannot continue to lose 500 farms every year and expect to preserve such an important, traditional way of life in Virginia. During my administration we will focus on helping new farmers get started, assisting farmers with long-term business planning, promoting a focus on higher-value crops, ensuring state regulations promote family farm ownership, and eliminating the estate tax."

--Governor Tim Kaine, Farm Bureau Press Release, Farm Bureau will welcome Gov.-Elect Tim Kaine to Convention, 11-23-05

[About repealing Virginia's Estate Tax] "Virginia needs a tax system that ensures fairness, fosters a competitive business environment and removes impediments to economic growth."

--House Speaker William J. Howell, Richmond Times Dispatch, 8/19/05