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Politics The Town Voice Balanced

Virginia and the Estate Tax

By Arlon Staywell RICHMOND — For whatever reason some years ago the federal government began phasing out the "estate tax." It might be caused by a trend toward turning more tax authority to states or perhaps because the tax is not justifiable. Debate continues in a few states over how much if any estate taxes they should collect.
Virginia's General Assembly 2002 Session
A bill to follow the federal phase out was defeated in 2002.
Virginia's General Assembly 2003 Session
It is clear as the session starts that the estate tax issue will be vigorously debated. Rallies are organized. The press is ready to devote space. As part of this coverage I wrote articles carried in various papers statewide. Those articles were for the Capital News Service and strictly "news" style without any of my opinions allowed. I sensed something was wrong and wrote an "editorial" or opinion piece for the Commonwealth Times, What Estate Tax is Fair?. I made arguments against the estate tax that weren't being made elsewhere, arguments it seemed to me without which the tax would surely remain.
Later in that session a bill was passed overwhelmingly to follow the federal phase out of estate taxes, but the governor at that time Mark Warner vetoed the bill and an attempts to override were a only few votes short of the necessary two-thirds majority. Warner had argued that the time was not right because the state needed the money, which argument I had tried to dismiss in my opinion piece.
A Side Note on NPR
On April 18, 2003 National Public Radio aired a program called, "Poll: Contradictions on Wealthy, Estate Tax." The "financial expert" John Ydstie said:
"The argument that the estate tax is unfair because the money has already been taxed once isn’t completely correct ... In fact a large percent of the wealth passed on in estates come in the form of capital gains which have never been taxed."
He then said, "Most Americans including those who took our poll don’t know these facts or very much at all about the tax system."
I was appalled at the bias of the story and notified NPR's ombudsman. The capital gains had never been taxed because the law to collect those taxes did not pass. It seems an obvious circumvention of the law to fail to pass capital gains taxes and then try to collect the money anyway disguised as an "estate" tax. Perhaps the honest approach of attempting to pass the capital gains tax itself would be more successful.
I am unaware of any response to my complaint to NPR.
Virginia's General Assembly 2004 Session
The session is extended several months because of arguments about the budget. The estate tax doesn't get much coverage at all. My hope was that the estate tax will be quietly eliminated. It did not happen.
Virginia's General Assembly 2005 Session
The same bills that have been on the session calendar in years past return. They still address the problem differently than I do. They try to keep "small farms" in families and eliminate the tax for estates below $10 million. Those arguments won't eliminate the estate tax. Too few care if family farms are broken apart. Also the children of the rich have been taught that they earn everything they get, that everyone has the same chance at college and future employment they have. It is something everyone would like to believe. No one wants to believe anything they have is an outright "gift" from anyone, including their parents. The cold hard truth is that parents must support their children throughout much of the education of those children and some parents provide more than others. At what time those parental obligations cease might be the topic of considerable discussion.
There are many things the government can do to make public education equal or more nearly so. However, the effectiveness of busing has been severely curtailed by urban flight. The rich have moved so far away from urban areas as to avoid busing and the inner cities have notable problems. People who can afford to keep their children out of urban schools probably will. Also with computers of various capacities available, the spending outside the school is becoming more a factor. An estate tax is not a solution to the problem.
Whether the goal is to collect capital gains taxes or ensure everyone has the same chance at success, voters need to be more realistic. If you want to tax capital gains then do, don't steal from people who possibly made none. If you want equal opportunity, then be more realistic about equalizing public education. The revenues from the estate tax won't even put a dent in the differences between urban and distant suburb schools. Focus on the real problem.
A Side Note on Clear Channel
On Feb. 26, 2005 on the Clear Channel Radio Network Mike McConnell said he believed the "Death Tax" was wrong because dead people don't get services from the state. Where did I hear that before? Oh yes! I wrote it two years earlier after I argued with my editor about the "news" coverage being inadequate because other people weren't making the necessary arguments and that I would have to make the arguments myself in an editorial piece.
August 28, 2006
The General Assembly eliminated Virginia's estate tax. You can see the change in HB516, which ordered a four year phase out of 25 percent per year. To attempt to make up the state revenues the tax credits for various types of land preservation were reduced. Did this 2003 article, What Estate Tax is Fair? cause the change?
January 13, 2009
A bill to reintroduce the estate tax, HB 1895, is filed. It is left in the finance committee that February 10. The resolve of the federal govermnet to continue with the planned phase out of federal estate taxes appears failing as well.

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