Put estate tax--ravager of farms, small businesses--in the ground

Free Lance-Star
Edd Houck

ONCE AGAIN, Virginia's Legislature has passed and Gov. Tim Kaine has provided great leadership in ridding the residents of the commonwealth of the cumbersome burden known as the estate tax. Recently, my colleagues in the General Assembly endorsed tax relief for Virginia's family farmers and small-business owners by approving legislation that calls for the full repeal of Virginia's estate tax effective in 2007.

Kaine introduced this topic as a means of resolving the budget standoff between the House of Delegates and the Senate. Both bodies responded to the governor's call for repeal of the "death tax." This is a great example of everyone working together for a mutually positive goal.

As I wrote nearly three years ago in this same forum, the estate tax threatens every family farm and small business throughout the state that's looking toward the next generation. Many family farmers and small-business owners realize that being land rich or property rich and cash poor puts them at risk when the estate-tax collector comes.

Nearly all of Virginia's roughly 48,000 farms are family-owned or -operated. The estate tax is an additional tax imposed on income, business enterprises, and property that have already been taxed when passed on to family members after a loved one dies. When these businesses or farms lack the cash or assets to cover the bill, the families often must liquidate their businesses and farms and lay off employees.

Families who try to save their farm or business will spend thousands of dollars on estate planning, with expenditures for life insurance and tax attorneys to protect family-owned businesses. On average, small-business owners spend $60,000 a year to hire estate-planning attorneys and buy expensive insurance policies to offset the cost of the tax or avoid it altogether.

Hard work, solid family ties, and the chance for economic prosperity are all fundamental American values. Along those lines, small businesses and family farms are the foundation on which Virginia was built. In one fell swoop, the estate tax can eliminate a lifetime of blood, sweat, and tears that it took to build that family business or farm from the ground up.

Estate-tax repeal will preserve family-owned businesses by letting them re-invest in their business, create jobs, or enhance employee health benefits with money otherwise spent on estate planning.

Besides threatening these family farms and small businesses, failure to repeal the estate tax will lead to sprawl and unwanted development. Family farms are ripe targets for developers as rapid growth has increased land values and tax rates.

Land that was once rolling hills and peaceful meadows has the potential to be turned into residential subdivisions and strip malls. On top of expediting sprawl, this trend can threaten wildlife and open space.

Repealing the estate tax will give families and individuals a reason to keep their estates in place and not pursue land-development deals as an option to cover the cost of their estate-tax bills. When heirs have to pursue real-estate transactions to cover their estate-tax costs, most are forced to willingly accept the highest price for the property, no matter the intent of the developer.

Virginia has always been regarded as a business-friendly state; keeping the estate tax on the books contradicts that reputation. We need to nurture small businesses and family farms to create jobs, not place impediments to their ability to succeed.

Admittedly, I've been a strong proponent of agribusiness in my 20-plus years in the General Assembly. I'm native to Central Virginia and have worked for more than two decades with the Virginia Farm Bureau and Virginia Agribusiness Council on numerous initiatives. I can tell you firsthand that the issues faced by Virginia's farm families because of the estate tax are serious, not just rhetorical.

The movement for repeal of the estate tax has truly been a bipartisan effort. Legislators from both sides of the aisle have put aside political differences to rally around this common cause. I thank my colleagues for their support for repeal legislation.

Repealing the estate tax will save family farms and family-owned businesses and keeps taxpaying families and job-producing businesses in Virginia. We've traveled this road before and our constituents have spoken.

Gov. Kaine deserves great credit for advocating the repeal and for guiding this legislation, which shows Virginia's farm families and small businesses that we're taking steps to protect their rights and their way of life.



EDD HOUCK, a Spotsylvania County Democrat, represents Senate District 17 in the state Senate. That district includes part of Spotsylvania County and the City of Fredericksburg and all of Culpeper, Louisa, Madison, and Orange counties.



Copyright 2006 The Free Lance-Star Publishing Company.