Assembly approves estate tax repeal, conservation tax credit cap

Associated Press

RICHMOND, Va. - The General Assembly on Monday approved Gov. Timothy M. Kaine's revisions to legislation repealing the state tax paid posthumously on estates of millionaires and capping land conservation tax credits.

The vote was 91-0 in the House of Delegates and 31-2 in the Senate.

Kaine's amendments double the total value of tax credits available annually for placing land within the Chesapeake Bay watershed off-limits to development. The cap would go from $50 million to $100 million.

The $100 million annual cap would be allowed to grow to reflect the inflation rate _ a feature that troubled some legislators.

"For the first time, we're indexing a tax credit," said Del. Robert Hull, D-Fairfax. "If every tax credit was indexed, we'd be broke."

Kaine's amendments also eliminate a cap of $750,000 in total credits for any single transaction of land outside the bay watershed, mostly in southwestern and Southside Virginia.

Republican conservatives for years had championed an end what they called the "death tax" at an estimated annual loss of about $98 million to the state treasury. They claim the tax forces families to sell farms and businesses they had kept for generations and drives the wealthiest Virginians to move to one of about two-dozen states that have already repealed the estate tax.

The cap on Chesapeake Bay watershed conservation tax credits was adopted to help offset the cost of the estate tax repeal.