A bipartisan effort to repeal the unfair state Death Tax emerged during the 2006 regular session of the Virginia General Assembly. Legislation sponsored by Delegate Bob Tata (HB 40) passed the House of Delegates by an overwhelming vote of 93-7. In the Senate, 24 members co-patroned legislation sponsored by Senator Tommy Norment (SB 504) that called for full repeal of the Death Tax, however the Senate adopted a substitute that limited repeal to a select few families based on valuation.

At the end of the regular session, no action was taken.

Another issue unresolved during the regular session was the state's 2006-2008 biennial budget. Both chambers were unable to reach agreement on transportation funding or state spending for the next two years, therefore Governor Kaine called the General Assembly into a Special Session to address these matters.

Currently in its second month, the General Assembly remains deadlocked over the issue of how to fund transportation in a Special Session. The House of Delegates remains committed to avoiding increases in taxes and has advanced a budget that dedicates an increase of over $1 billion to transportation over the next two years. The Senate remains committed to various packages that will result in about $2 billion in additional transportation spending over the next two years.

While the House and Senate are in disagreement over the methods of funding transportation, both the House of Delegates and Senate of Virginia have passed new budgets that include versions of repeal of the death tax.

The House budget contemplates FULL repeal of the death tax on January 1, 2007. This is the same plan that passed legislatively in the regular session of the General Assembly.

The Senate budget contemplates PARTIAL repeal of the death tax for some families and businesses, but not all. Virginians for Death Tax Repeal has been educating members of both parties and both chambers of the problems with this version that will leave many unprotected and liable for the tax that threatens so many businesses. Many think that passing this version of repeal is worse than passing nothing at all.

Full repeal of the death tax will provide $120 million a year in tax relief. Partial repeal will range from $60 million to $115 million per year in tax relief, but will continue to burden family farmers and business owners because of the peculiar and unstable nature of the Senate partial repeal plan.

In discussions with senior members of both the House and Senate, legislators are saying that they continue to keep death tax repeal as a major issue in debating the budget. Indications from House and Senate conferees are that they hope to repeal the death tax fully during the current Special Session of the General Assembly.

The following points define our coalition's firm support for full elimination of the death tax:

• Repeal of the unfair Death Tax was endorsed by the General Assembly in 2003. Since then, biennial General Fund projections have increased from $24.4 Billion to more than $35 Billion for FY 06-08 -- an increase of 43 percent -- while the fiscal impact for repeal of the death tax has declined.

• Full repeal of the Death Tax will help relieve the financial burden placed on Virginia's farming community - 98 percent of Virginia's farms are family-owned, totaling 48,000 farms whose assets are tied to the land they harvest. Expensive tax and business planning efforts further deplete agricultural assets.

• Attempts to repeal the tax partially continue an unfair tax policy. Small business owners and family farmers will still spend millions of dollars collectively to buy expensive policies to avoid the tax. This will take money away from job creation and hurt the ability of employers to enhance health insurance coverage for their employees and their families.

• Nearly 70 percent of family-owned businesses fail to reach the second generation, and 88 percent fail before the third due in large part to the costs of estate planning, policies and ultimately tax bills.

• Economists in the Department of Planning and Budget assert that capital formation and investment in Virginia will increase as a result of the death tax cut (Virginia Dept. of Planning and Budget Division of Economic and Regulatory Analysis, January 7, 2004).