Press Release: Senator Norment Succeeds in Senate Passage of Death Tax Repeal Measure

FOR IMMEDIATE RELEASE
Contact: Stephen Horton, 804-564-1253

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.

Even with the flaws, it is an important day for efforts to repeal the death tax fully in Virginia. We hope that the House and Senate can work together to protect jobs and enhance the prosperity of Virginia by fully repealing the onerous and unfair death tax by 2007.

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