The House passed a veto-proof repeal of the estate tax on a 69-29 vote Monday to drown out Democrats, who said the lost revenue flies in the face of the state’s budget crisis.
If the Senate can manage 27 votes on its side today, the measure will be veto-proof. The Senate gave its preliminary approval Monday. The votes are there: more than a two-thirds majority killed an attempt to narrow the measure on a 11-28 vote Monday.
Gov. Mark R. Warner said he will not sign the repeal unless it is narrowed to just farms and small businesses.
“I believe we need to reform the estate tax, but it needs to be in the context of overall tax reform. To drive another $130 million hole in the budget so some of these members can go out and campaign on another tax cut this year is irresponsible,” he said.
The tax is on estates valued at $1 million and higher. The repeal would begin July 1, 2004 to coincide with the repeal of the federal levy.
Virginia Beach Delegate Robert “Bob” Tata, R-85th District, chief sponsor of the House version, termed it reaching into the grave and “extracting one last pound of flesh.”
Democrats did criticized the tax cut timing and effect on the budget.
“It’s not that we’re trying to punish those who have done well in life,” said Portsmouth Delegate Kenneth Melvin, D-80th District. “The problem I have with this bill it’s insulting in its timing because of the budgetary crisis that you all know that we’re deeply into now.”
He said the House should not have rejected a narrow version that would have helped small businesses and farmers.
Nelson Sen. Robert Creigh Deeds, D-25th District, said the state’s priorities should be to K-12 education that is underfunded by at least $600 million and higher education found several years ago to be $300 million short but then cut by $340 million last year.
“We cannot afford to reduce our revenue stream by another $136 million in light of the promises we fail to keep and the commitments that we have we have failed to address,” he said.
The state has tried to phase out other taxes like those on cars and food, but this tax relief gets to jump to the front of the line, said Fairfax City Sen. Leslie Byrne, D-34th District. It shows a preference to the wealthy, she and others said.
The entire Prince William delegation supports the repeal.
Sen. Charles J. Colgan, D-29th District, said the tax is not just about the wealthy. Family businesses, after years of work, have to sell or borrow to pay the tax, he said.
He had one constituent who had to borrow $600,000 to pay the estate tax when his father died.
“I just don’t think it’s right for people to work all their lives and then the government takes it,” he said.
The real problem is the federal tax that can be up to 54 percent, he said.
Virginia’s portion of the tax would remain if the General Assembly does not act.
He said it is important to get it on the books, but like past repeals like on prescription drugs and corporations could be delayed if the revenues are not there.
Delegate Michele B. McQuigg, R-51st District, was not sure how she would vote on the measure in the weeks before the vote. But she said so many farms have been lost in Prince William because they could not afford the tax. It also does not impact the current budget cycle, she said.
“They are rich in land but poor in cash,” she said.