Virginia Republicans Propose Tax Breaks On Estates, School Supplies

y LARRY O'DELL
Associated Press Writer

(AP) - Republican delegates in Richmond pledged Thursday to renew their efforts to repeal Virginia's estate tax and to establish a "sales tax holiday" for purchases of clothes and school supplies before the start of a new academic year.

House Speaker William J. Howell, R-Stafford, said at a news conference that many other states already offer those tax breaks and that Virginia needs to match them to remain competitive.
"For me, making these commitments is simply the right thing to do," Howell said. "Further, legislation is necessary because we cannot afford to grant other states, both regionally and nationally, the opportunity to gain economic advantage over our commonwealth."

For example, he said some Virginians already cross the border to do their back-to-school shopping in neighboring states that offer the tax holiday each August.

Stacy McGrath, a Hanover County mother of three, said the cost of clothing rapidly growing children and replenishing their school supplies every year "can really take a bite out of a family's budget" and mar what should be an exciting time for parents and kids alike.

"Some families can really experience hardships," she said.
Several sales tax holiday bills have failed in recent years, but Thursday's endorsement by the House GOP caucus could improve the measure's chances in the 2006 session. Del. Jack Reid, R-Henrico and a previous sponsor of the bill, said the fact that most neighboring states now offer the holiday also should prompt Virginia lawmakers to follow suit.

Details of the proposal have not yet been worked out. Reid said he envisions a tax-free period for a week to 10 days. Items exempted would be determined in consultation with the Virginia Retail Merchants Association, he said.

Repealing the tax paid posthumously on the estates of millionaires also is not a new idea. The measure passed the General Assembly but was vetoed by Gov. Mark R. Warner in 2003. Last year, it was a casualty of a three-month stalemate over the budget.

The federal government began phasing out its estate tax in 2001. Virginia is one of 20 states that continues to impose what critics call "the death tax." Howell said the tax impedes economic growth and can force family owned companies and farms out of business.

Mary Jane Hogue agreed. She is vice president of JMJ Corp., a Richmond office interiors company started by her father. Hogue has three siblings also working in the family business, which she said would be hit hard by the estate tax if her their father died.

"No one in our family has ever considered themselves rich," Hogue said, but the government likely would have a different view because of the value of the business they built over the years. She said she worries not only for her family but for the 65 JMJ employees, many of them the sole breadwinners for their own families.

Democrats were receptive to the GOP tax proposals. Party spokesman Mark Bergman said the Democratic gubernatorial candidate, Lt. Gov. Tim Kaine, supports both ideas and noted that Warner proposed a back-to-school tax break in 2001.