Death Tax: A Grave Matter For Virginia’s Seniors

Dying Should Not Be A Taxable Event

Statement By 60 Plus Association President Jim Martin

Richmond State Capitol, HR-4, 1130AM, 1/13/04

Good morning. My name is Jim Martin. I’m President of the 60 Plus Association, an 11-year-old seniors’ lobbying and activist organization. 60 Plus relies on support nationally from nearly five (5) million seniors with some 20,000 here in the Commonwealth. Our primary goals are saving Social Security for young folks — and abolishing the death tax for us old folks.

Today, I’ll discuss the latter of the two — the death tax. And I’ll mention a few really gruesome names that have been suggested to us: The Grave Robber’s tax, the Grim Reaper’s tax, the cruelest tax, the exit tax, the departure tax, the last grasp tax, the pine box tax, and yes, if you’ll indulge me, the stiffest tax of all.

The bottom line is the death tax is a grave matter for the 60 Plus Association.

The death tax can’t hurt the dead, but it sure can put a hurtin’ to the living!

In a bid for tax revenues, Governor Warner said the death tax on personal estates, family farms and other so-called ‘closely-held family businesses’ — with an estate value of less than $10 million dollars — that they’d be exempt from having to pay this tax. Let’s get real…the overwhelming majority of family businesses that are valued at more than the $10 million dollar threshold will NOT pay this tax! Why? Because they’ll set up trusts or foundations via their lawyers and accountants to avoid this tax! And who can blame them? In fact, I call the partial relief of this tax the LAWYERS AND ACCOUNTANTS RELIEF ACT, as all it does is provide a bunch of work for those industries’.

If Governor Warner thinks he is going to raise or retain a lot of revenue with this tax, I make a point and a suggestion. The point: If it’s such a revenue-raiser, why, then, have most states (37 or 38) repealed all or most of their inheritance tax? The suggestion: For Governor Warner to place a phone call to a fellow Chief Executive — four-term New York Governor George Pataki. I daresay Governor Warner would get an earful. It was Governor Pataki who said a few years ago when trying to repeal New York’s inheritance tax, ‘Our seniors aren’t leaving New York and heading to places like Florida and Arizona just for the sunshine’, a clear inference to seniors’ vacating states with unfriendly inheritance taxes and relocating to states without them.

That’s the lesson we’ve learned through the years. Besides testifying before Congress to call for abolishment of the federal death tax, I’ve testified before the House Ways and Means Committee of Maryland and before the Senate Finance Committee of Pennsylvania with similar cautions to rid the states’ of Uncle Sam’s nephew, the inheritance tax, imposed on the remains of the estate once it is passed to the heirs. Incidentally, Pennsylvania received the dubious distinction by Forbes Magazine of being in the category of “grabbiest states” with its inheritance tax cited as a main cause. The author of the article labeled Pennsylvania as one of the “worst states to die in” because of its tax burden.

Let’s remove Virginia from what I call ‘the dirty dozen’ of states’ that still retain an inheritance tax. Let’s move Virginia into the 21st Century by getting rid of it.

Let’s not rob from a dead Peter to pay for a living Paul. The 60 Plus Association’s polling shows that 77% of the public opposes this tax, even though less than 2% are affected by it. Why? The public cites the unfairness of a tax that’s triggered only by the act of dying. That’s why the 60 Plus Association’s battle cry for years has been ‘Dying Should Not Be a Taxable Event.’

60 Plus has worked closely with the National Federation of Independent Business (NFIB) on both the national and state levels. NFIB’s findings here in the Commonwealth were that 60% of their members oppose Governor Warner’s overall tax increase but even more dramatic — and buttressing our findings at 60 Plus – 70% of NFIB members oppose his death tax proposal.

Another important finding among African-American business owners in a national survey a few years ago, cited the death tax as a major hindrance to job expansion. I shared a press conference with National Black Chamber of Commerce President, Harry Alford, who said that “getting rid of the death tax would be a great start to breaking the economic chains that bind struggling African-American businesses.”

Let’s agree to stop taxing the dead and then taxing the remaining assets once they’re turned over to their heirs. Let’s allow Virginia to be a place where in-state entrepreneurs stay…and where out-of-state businesses wish to come because we’re a tax-friendly state. Encourage people to stay in Virginia, not go someplace else, as New York Governor Pataki observed.

On a personal note, I’ve been called the father of the term ‘death tax’ for ‘estate tax’ by Grover Norquist on the right and Bill Gates, Sr. on the left. To be accurate, President Reagan referred to the ‘death tax’ way back in 1982. It is true, however, that I did revive daily use of the term in the 1990’s and into this century and it is true, as Bill Gates Sr. describes in his book, that I set up a beer and pizza fund into which you paid a dollar if you said ‘estate tax’ instead of ‘death tax.’

I’m here today to try to shame — embarrass, if you will — the Governor into abolishing the inheritance tax. 38 of 50 states have done so, either fully or partially. USC law professor Edward J. McCaffery, testifying before the Senate Finance Committee, called himself an “unrequited liberal” who has seen the light. That the estate tax is not doing what liberals thought it would do — that is, redistribute wealth. Professor McCaffery went on to say economic studies show it is having the opposite effect and that serious thought should be given to repeal. I agree with him. A tax should have some socially redeeming value — this tax has none. It’s a hindrance to job expansion and creation of new jobs. In over 40 years of political activism, I’ve seen a lot of taxes come — but not many go. This is surely a tax whose time to go has come.

The death tax is bad public policy. Let’s kill the death tax. Don’t wound it. Kill it, Black Flag dead!

Thank you.