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LOCAL Commentary :: Civil & Human Rights : Elections & Legislation

More Tax Cuts for Wealthy Virginians?

Members of the Virginia General Assembly are trying to push through stealth tax cuts for the super-rich that will deprive the state of over $100 million annually -- shifting more of the tax burden to the middle class and the poor. The bills are now before a joint committee but could be reported out at any time. Urgent oppositional action is needed --- the General Assembly is scheduled to complete its work this week (but news reports are that it may be extended)
More Tax Cuts for Wealthy Virginians?
Hunter Mabry*

There they go again — members of our Virginia General Assembly trying to push through stealth tax cuts for their super-wealthy friends that will deprive the state of over $100 million a year.

This time they are trying to virtually eliminate the estate tax — the tax paid on the hereditary transfer of vast wealth — even though Virginia needs more revenue to meet urgent needs such as roads, schools, and health services.

With the high level of exemptions already in effect (2006-2008: $2 million; 2009: $3.5 million; doubled for couples; additional exemptions for small businesses and family farms) — this tax is currently due on less than two percent of all estates.

Even so, fear tactics based on fraudulent claims are being used to scare persons into support for eliminating taxes on this two percent. For example, Virginians for Death Tax Repeal claim that “The Death Tax is an unfair burden upon the average person, the small businessman, the family farmer and while most states have followed the federal lead and repealed the tax, Virginia has not.? The only true part of this claim is that Virginia has not yet repealed this tax.

“An unfair burden upon the average person?? Not true. According to a report from the Federal Reserve earlier this month, both the average U.S. family net worth ($448,200), and the median family net worth ($93,100 – mid-point between the highest and lowest), are far below the taxable level.

“An unfair burden upon . . . the small businessman?? Not true. A recent Federal Reserve study found that the average small business is worth $702, 566 — and therefore completely exempted.

“An unfair burden upon . . . the family farm?? Again, not true. A 2005 report by the Congressional Budget Office found that at the 2006 level of exemptions, only 123 farms nationwide would have owed any tax and that the vast majority of these would have sufficient liquid assets (such as bank accounts, stocks and insurance) to pay the modest tax without having to touch the farm.

“Followed the federal lead and repealed the tax?? Not true, or at least misleading. The federal estate tax is still in force, through 2009. If no further action is taken, it will be repealed for 2010 and then reinstated in 2011.

These fraudulent claims are being used in efforts to give the super-wealthy more tax cuts by raising the exemption level to $10 million, and exempting ‘closely held businesses’ and ‘working farms’ from any estate tax.

According to the Virginia Department of Taxation, raising the exemption level for the super-wealthy from $2 million to $10 million will result in an annual state revenue loss of $120 - $140 million. That would mean either higher taxes for the rest of us, or damaging cuts in funds for paying for such needs as public school teachers, roads, public libraries, and public health services.

Exemption of ‘closely held businesses’ from this tax sounds innocuous — as though it would protect the “Mom and Pop stores?. But most “Mom and Pop stores? will never face an estate tax. However, what could be covered is alarming. ‘Closely held’ does not necessarily mean small. For example, Mars, Inc., points out that “we are still privately owned, making us one of the largest ‘small businesses’ in the world.? This ‘small business’ is huge: an $18 billion business operating in over 65 countries, accounting for 15 percent of all candy sales globally, and also producing Uncle Ben’s rice, Pedigree pet food, Flavia drinks and electronic vending and gaming machines.

This ‘closely held business’ is owned by the Mars family — Forrest and John Mars of northern Virginia, and Jacqueline Mars of New Jersey. They are ranked 19th in the Forbes 2005 list of the 400 richest Americans, with wealth of $10 billion each. They have contributed heavily to the lobby for repeal of the estate tax.

Already there is a growing and dangerous wealth divide in our country. Creating more tax loopholes for the super-wealthy will only increase this gap and move us further toward a society of ‘haves’ and ‘have nots’. Removing tax on the hereditary transfer of vast wealth will place a greater tax burden on those less able to pay, and undermine the ideal of America being a land of equal opportunity for all.

But the ‘repealers’ are dangerously near getting such pernicious legislation enacted. The Senate has already passed its version (SB504) by a vote of 35-4, with only Edwards, Locke, Marsh and Miller voting ‘no’, and the House has passed its version (HB40) by a 93-7 vote, with only Brink, Eisenberg, Englin, Plum, J.M. Scott, Toscano and Watts voting ‘no’.

We cannot afford to remain silent and permit this harmful legislation to be enacted as each chamber considers the other’s bill. If your senator or delegate is among those listed above as voting‘no’, call or write to thank him or her for their courageous stand and ask them to continue to oppose this harmful legislation. If your senator or delegate supported this dangerous legislation (is not listed above), call or write to express your strong disagreement, and urge them to reconsider, work for the interests of all Virginians, and oppose creating more tax loopholes for the super-wealthy. Also, contact Gov. Kaine and urge him to veto any such legislation.

For information on how to contact your senator or delegate, call 800-889-0229 or 804-698-1990 (Constituents Viewpoint Hotline), or view “Who’s My Legislator? at . Contact Gov. Kaine at (804) 786-2211 or view “Contact Us? at .

* Mabry is a retired professor of Christian Ethics, and Church and Society. He lives in Waynesboro.

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