Supporters of tax repeal go on offensive

Richmond Times-Dispatch

Proponents of repeal of the Virginia estate tax yesterday went on the offensive, challenging claims it's a sop for the rich. Democrats, meantime, pushed a cheaper alternative to the Republican initiative.

Estate-tax relief is emerging as a defining issue in the election-year session of the General Assembly, spotlighting the eagerness of lawmakers to advocate tax cuts even during a fiscal crisis that has led to sweeping cuts in services.

Quoting his late grandfather, Senate Republican Floor Leader Thomas K. Norment Jr. of James City County said, "It's one thing to be taxed to death. The only thing worse is getting taxed after you die."

But supporters, eager to put an everyman's face on this controversial proposal, enlisted owners of small family-run businesses who say the estate tax threatens the future of their ventures.

Their concern: That the tax - 16 percent on estates valued at $1 million or more - will force them to sell all or part of enterprises that have been built over a lifetime.

"I want to pass on the results of my hard work to my children," said John A. Cox, president of Cox Transportation Services Inc., an Ashland trucking firm with 260 employees.

Cox attacked claims - primarily by Democrats - that estate-tax relief would only benefit about 1,100 of Virginia's richest residents. "I have never been idle or fabulously wealthy," he said.

However, the effort to repeal the estate tax is bankrolled, in part, by an anti-tax lobbying group whose clients include the Virginia-based Mars candy dynasty.

According to The Virginian-Pilot of Norfolk, the Policy and Taxation Group of California hired lobbyists from McGuireWoods, a politically muscular law and public-affairs firm here.

The Virginia estate tax generally tracks its federal counterpart, which the Bush administration and Congress agreed to phase out incrementally.

Gov. Mark R. Warner, a Democrat and multimillionaire high-tech investor, has expressed alarm about elimination of the Virginia tax, saying it would be an added burden on a cash-strapped budget.

Further, Warner says repeal should be part of a broader effort to overhaul the Virginia tax system, a task that a Republican-dominated commission last year failed to do.

Because of the cost - $137 million last year - and the state's continuing revenue shortfall, which is approaching $6 billion, proponents want to delay repeal of the estate tax until 2005.

Sen. R. Creigh Deeds, D-Bath, is sponsoring legislation that would restrict an estate-tax rollback to farms and closely held businesses, both of which are often controlled by families. A closely held business is owned by relatively few stockholders and is not publicly traded.

Del. Albert C. Pollard Jr., D-Lancaster, a co-patron, said the measure would cost less than a tenth of the Republican versions, carried by Norment and Dels. Robert F. McDonnell and Robert Tata, both of Virginia Beach.

"Why now?" Pollard said of latest Republican-authored tax break. "To me, we have to finish the commitments we've made - car tax, food tax. It's a very cynical bill because we get credit for passing a tax act without paying for it."

The cost of the no-car-tax plan has more than doubled to nearly $900 million a year. But final elimination of the levy has been delayed indefinitely because of the sour economy.

Estate tax relief could provide a significant boost to Norment and McDonnell. Both face re-election this year, but McDonnell is angling for the Republican nomination for attorney general in 2005.