Black Chamber Endorses Repeal

New Journal & Guide

Virginia has a unique opportunity to get rid of a tax that threatens to eliminate the years of sweat and sacrifice African-American entrepreneurs have dedicated to the thousands of successful businesses that exist across the Commonwealth.

This so-called death tax is unfair. To date, more than two-thirds of Virginia’s elected lawmakers voted to repeal the death tax beginning next year. They were correct to do so. In the African-American community, repeal of the death tax is an important tax reform issue since minority-owned and women-owned businesses tend to be among the hardest hit when the death tax collector comes.

The bipartisan support for repeal of the death tax at the federal level, and in more than 30 states, has been motivated in large part by recognition of this fact. Minority-owned and women-owned businesses are usually already undercapitalized. They provide goods and services to traditionally under-served communities. Think about your neighborhood grocery, dry cleaners, barbershop, auto repair, pharmacy or any other critical service for your family. These are just a few examples of the type of locally owned companies that are threatened by this killing tax.

The National Black Chamber of Commerce refers to the death tax as the “legacy killer” because that it what it does. It kills the legacy of economic empowerment and independence that can no longer be passed on to one’s son or daughter. The community investment is sucked up to pay for a massive tax that comes due only because the family founder has died. I’ve seen it happen time and time again.

The death tax is also a job killer. Small businesses are the backbone of Virginia’s and America’s economy, and the death tax can easily break the back of a small business. When you take thinly capitalized, privately owned businesses that have their assets tied up in real estate or equipment, and you hit their owners with massive one-time death tax bills – after they’ve paid taxes their whole lives, a host of very bad things happen. Instead of the heirs continuing to run the farm or business, more often that not they are forced to sell it to pay the tax bill.

The result: Businesses that otherwise would grow, don’t. Businesses that otherwise could keep their workforce in place, and perhaps hire more employees, can’t.

The Chairman and CEO of Black Entertainment Television led a coalition of African-Americans who worked to abolish the federal death tax. He and about 40 other African-American business leaders had this to say in full page newspaper ads they ran in the Washington Post and New York Times on April 4, 2001:

"Unlike most White Americans, many African Americans who accumulated wealth did so facing race discrimination in education, employment, access to capital, and equal access to government resources. In many cases, race discrimination was supported by governmental policies and failure to enforce equal rights laws. It is unfair and unjust for the government through the Estate Tax to seize a portion of the estate of the individuals it failed to provide equal opportunity." (Washington Post, April 4, 2001, page A-4, "African American Business Leaders Call for an End to the Estate Tax")

Repealing the death tax in Virginia will result in a short-term revenue loss of
about $70 million annually – less than three-tenths of one percent of the state’s general fund. That’s a small price to pay to eliminate a tax whose destructive effects ripple
through Virginia’s economy with a multiplying negative impact on business investment and job creation.

A broad, bipartisan majority in the General Assembly has acted to place Virginia on the side of fairness and economic growth by eliminating the death tax here in the Commonwealth. The legislation now lies with Governor Warner.

My hope is that Governor Warner will look beyond the simplistic revenue issues and consider the fundamental unfairness of the death tax and move Virginia forward to join more than 30 other states in repeal. If not, I urge the General Assembly to remember the need to protect those entrepreneurs – those community investors – who need an opportunity to build and pass on a legacy of economic independence.

And I thank those members, Democrat and Republican, African American and Caucasian, man and woman, who supported repeal of the unfair death tax. Together, you can face down the opposition and know that you are doing the right thing for all Virginians if you stick to principle and remain in support of repeal of the death tax.



Harry C. Alford, Jr.
President & CEO
National Black Chamber of Commerce, Inc.