RICHMOND - Senator Tommy Norment's legislation (SB 504) to repeal Virginia's onerous death tax made its first forward step in nearly three years today as the Senate passed a limited version of his bill today by a 35-4 vote.

The legislation, while flawed with certain restrictive limitations, provides a vehicle for eventual repeal of the death tax in Virginia. Senator Norment is to be congratulated for his role in supporting repeal and moving the issue forward. We also thank Senators Jay O'Brien and Ryan McDougle who introduced legislation to fully repeal the death tax this year, as well.

Twenty - four members of the Senate signed on in support of the original legislation to fully repeal the estate tax by 2007. The House of Delegates earlier endorsed overwhelmingly legislation (HB 40) to fully eliminate the death tax by 2007. Governor Kaine has argued in favor of fully repealing the entire estate tax, and has used arguments that indicate full -- not partial -- repeal is the best option for protecting Virginia jobs.

We urge those who support repeal of the death tax to thank Senator Norment and let members of the House and Senate know that they support full repeal of the death tax. They might want to remind members of the following information:

• Full repeal of the death tax will help family farms and small business owners. Well-intentioned provisions to exempt only "closely held businesses" and "working farms" will have no impact according to the Virginia Department of Planning and Budget's analysis from 2004 (HB 1065, 2004 session fiscal impact statement).

• Schemes involving the purchase and resale of working farms will likely develop if partial repeal legislation were to become law, resulting in the future residential or commercial development of pristine open space.

• Even those who own working farms may still be liable for the full burden of the death tax based on legal definitions of working farms -- up to as much as 16% of a farm's value. That is over and above the federal death tax liability.

• The valuation clause included in SB 504 will NOT remove the costs of tax avoidance by family business owners and farmers, and it will continue to divert resources from job creation and growth. Small businesses can spend tens of thousands of dollars annually to pay for policies to protect the business from death tax liabilities.

• The Virginia Bar Association Wills, Estates and Trusts Section has expressed concerns over the "unusual and perhaps arbitrary" provisions in the partial repeal bill that will "likely invite aggressive tax avoidance techniques that may undermine public confidence in the system."

• The valuation clause included in partial repeal legislation is a cliff, not an exemption. All businesses and farms today -- or thirty years from now who exceed the non-inflation adjusted arbitrary cap will be liable for at least a $1 million tax bill in Virginia for exceeding that cap.

• Those with means will certainly understand the importance of relocating their assets to other states like Tennessee or Florida, robbing Virginia of future income taxes, philanthropy and community service.

News From Earlier in the Week

Tuesday, the Senate Finance Committee took action on SB 504 voting 13-2 in favor of a substitute that allows estates valued at $10 million or less to be excluded from state death tax collection. Senator Tommy Norment, patron of the original SB 504, voted against the substitute bill. He favors his original bill, as do we, calling for full repeal of the estate tax, not just repeal for a select few based on arbitrary amounts or those who set up their business the way the government says to.

Click Here to see update in its entirety

In the News

Farmers Cultivate Lawmakers
By Tom Mitchell, Harrisonburg Daily News Record, 2/17/2006

...Dale Gardner, executive secretary of the Virginia State Dairymen's Association, said that members of the state's dairy industry are seeking out not only individuals but also groups in government about ending estate taxes on most farms.

"There seems to be sentiment up in Richmond to do away with the estate tax," Gardner said. "They talked about putting a cap on eliminating the tax at farms worth $10 million."

To Gardner, a $10 million ceiling on estate-tax exemptions may not be as encouraging as it seems "not the way land prices have been going up," Gardner said.

Notable Remarks

"So many other states are on a flight path where they're phasing out the estate tax just as the federal government is," Kaine said... "We're already seeing Virginians leave Virginia, move their domiciles to other states because of the estate tax policy here."

--Governor Tim Kaine
Watch Video Clip

Ask Others to Join

Please take the time to forward our weekly newsletter to others in your email list and encourage them to visit our website and contact their legislators. It is important that more Virginians understand the ramifications of the death tax and how partial repeal efforts will fall short of the protecting jobs, and may cost jobs, in Virginia.

In Other States

Click here to see news stories from other states working to repeal their state death taxes, including neighboring Maryland.

Remaining Death Tax Repeal Legislation

HB 40 (Tata)
Support WITHOUT amendments
Currently in Senate Finance, Passed House 93-7

SB 504 (Norment)
Oppose in current format
Support with amendments to conform with federal law
Passed Senate 35-4

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Visit our updated website to learn more about how the Death Tax impacts family farmers, business owners and economic growth, visit www.deathtaxrepeal.com