Estate tax clears Senate on veto-proof vote

Associated Press
Bob Lewis

Legislation exempting the estates of millionaires from being taxed after they die cleared the Senate on Tuesday with enough votes to override a likely veto by Gov. Mark R. Warner.

The bill to repeal the estate tax effective in 2005 won final Senate passage on a 31-8 vote one day after the House approved it on a veto-proof vote of 69-29.

Under the legislation, Virginia's tax on estates valued at $1 million or more will be exempted from taxation.

The vote found the General Assembly's dominant Republicans solidly behind their centerpiece legislation for this election-year legislative session, with a few Democrats supporting them. Opponents accused the GOP of continuing to eliminate unpopular taxes with no regard for the fiscal consequences and said repealing the tax on less than 2,000 of the wealthiest Virginians sends the signal, as one legislator put it, "we'll tax you except if you have a rich daddy."

Supporters said the bill keeps capital and jobs from fleeing Virginia for other states that have ended the tax and allows people build successful farms and businesses to pass to their heirs rather than selling assets to pay taxes.

"This is a bill that, when it is enacted, will affect no more than 1,000 families yet it takes $135 million out of our general fund," said Sen. R. Creigh Deeds, D-Bath.

Warner has criticized the bill because it would cut another tax while phaseouts the legislature has already ordered on the car tax and the tax on groceries remain stalled. He said an estate tax repeal should be part of overall tax reform.

"If you work 12 hours a day, you pay taxes on every penny of that salary, and if you work two or three jobs a day, you pay taxes on that salary, and if you're able to save a few bucks, you pay taxes on the interest on that savings. Even if Lady Luck smiles on you and you win the lottery, you pay taxes on your winnings," said Sen. Leslie L. Byrne, D-Fairfax County.

"But we've got another lottery here where the fortunate, who are born to wealth, who have Lady Luck smile on them with a rich grandma or a rich grandpa or a rich daddy or a rich mama - if they inherit under this bill, they don't pay taxes," Byrne said.

Sen. John Edwards, D-Roanoke, called the timing of the bill, coming as the state completes a year in which it has had to reconcile $6 billion in budget shortfalls, "truly bizarre."

"We're peeling off one unpopular tax after another without regard for the consequences. Look at 1998. There was an unpopular tax out there - the car tax - so what do we do, we peel it off regardless of the consequences," Edwards said.

Supporters flew into a furious defense of the bill, including Democratic Sen. R. Edward Houck of Spotsylvania, who said the without the legislation, small businesses and farms throughout his district would be lost.

The bill's sponsor, Sen. Thomas K. Norment Jr., clearly bridled under Byrne's remarks.

"Let me tell you, all the assets and wealth that would impacted by Senate Bill 1123 are not from your rich daddy," he said, emphasizing the final two words. "There are many many Virginians and many in this room who do not enjoy generational gifts and work 12 to 14 hours a day for many many years to accumulate that which they have."

The House bill now comes before the Senate for action and the Senate bill heads to the House.