Scare Tactics: Repeal of the Estate Tax is Right, Just

Richmond Times-Dispatch
THOMAS NORMENT

This past session, I was proud to sponsor a bill in the General Assembly to repeal the death tax, which brought Virginia in line with the federal government and 33 other states. The vote to pass my legislation was bipartisan and overwhelming.

Repealing the death tax now is the right thing to do. All law-abiding Virginians pay taxes on their income, their businesses, their property, and their savings. To tax them again after death is simply unjust.

An appeal by nearly four dozen African-American businessmen for death tax relief a few years ago is typical of the arguments we heard in the recent session. No doubt it is one reason numerous African-American Senators cast votes to repeal Virginia's death tax. In a full-page ad, prominent black business leaders wrote:

The estate tax will cause many of the more than 1 million black-owned family businesses to fail or be sold when [it] is imposed on already undercapitalized minority-owned enterprises . . . .In addition, the entire black community suffers when these minority- and family-run businesses that provide jobs and services in under-served communities are forced to shut down to pay the estate tax . . . .Repealing the estate tax will permit wealth to grow in the black community through investment in minority businesses that will stimulate the economic well-being of the black community and allow African-American families to participate fully in the American Dream.

Yet Governor Mark Warner has chosen to stand for an unjust system that requires income and property to be taxed twice. Now he is twisting arms to try to get members of the General Assembly to uphold his misguided veto tomorrow.

I AM HOPEFUL that General Assembly members will not be swayed by the Governor's attempt to use fears surrounding the budget as a club to lobby swing votes on the issue. What was right just a few weeks ago remains right today. Why should Virginia tax law be less fair than the laws in other states?

The Governor's budgetary scare tactics are a smokescreen. The fact is that most of the states that are repealing their death tax have more severe budget shortfalls than Virginia's. But despite such shortfalls - indeed, because of them - they are doing what is right and just by ending the death tax.

The destructive effect of the death tax is understood by Virginians as well. It is just plain common sense that people are more likely to invest in businesses, farms, and other ventures in places where they suffer a lower tax penalty for doing so. That means we are handicapped when it comes to competing for new job opportunities and new ways to encourage economic growth.

THE GOVERNOR is also using the old political game of class warfare to push his point of view. His approach is inaccurate and divisive. He calls repeal supporters in the General Assembly - even those who are members of his own party - "irresponsible" for supporting the measure. He assails their motives, suggesting they are out only to benefit "the wealthiest" Virginians.

The fact is that a coalition of more than 60 Virginia organizations - col- lectively representing thousands of farm- ers, small-business men and women, preservationists, agribusiness enterprises, and retail merchants - have taken the lead in championing repeal.

These groups have taken up this cause because no one benefits when job-producing businesses are forced to sell out, close down, or scale back and lay off workers to pay a massive death tax bill.

In reality, those who would be considered "very wealthy" are not the ones really hurt by the death tax. They just pay high-priced accountants and lawyers to find entirely legal methods to avoid or minimize the tax.

Also, prominent taxpaying families and individuals can easily relocate themselves and their business headquarters to any of the 30-plus states that have wisely eliminated this tax. When they leave Virginia, they take not only the jobs they provide and the death taxes they pay, but income taxes, payroll taxes, and a variety of other state and local tax revenues as well. In my view, that is not a strong blueprint for economic development.

IT IS NOT THE mega-rich who get really hurt by the death tax, but those who own family farms, small businesses, and struggling new enterprises. That hurt is extended to workers employed by these enterprises who lose their jobs when businesses close or retrench to pay the huge tax bill.

Most recently, the Governor has taken to insisting that death tax repeal should be considered only as part of a comprehensive tax reform plan. But that is just another smokescreen. If this concern were genuine, we would have long ago seen the tax reform plan the Governor promised to present to the 2003 session of the General Assembly when he was a candidate in 2001. We have not.

It is no exaggeration to say this moment is a watershed in Governor Warner's relations with the Virginia legislature. I held out hope that the Governor would be wiser than to heed partisan calls to take such a negative and cynical course. His veto has proved he is going to be as partisan as any Governor in recent history. If Governor Warner truly is interested in working across party lines to build a better future for Virginians - and for "one Virginia" - then he will halt his desperate lobbying efforts and scare tactics and allow the members of the General Assembly to do what is right for the Commonwealth and its citizens. It would go a long way toward regaining the trust and understanding necessary to govern effectively.

Thomas K. Norment, Jr., represents the 3rd Senatorial District in the General Assembly.