Diary

Scuttling Tax Breaks Is On The Table, Too

When the state budget is in the red, some turn to cutting spending. Others, though, look to taxation — including rolling back tax breaks:

In an interview with The Examiner last week, Sen. J. Chapman “Chap” Petersen, D-Fairfax, said he wasn’t prepared to discuss the details of the planned bill, but said it would focus on “protecting the middle class taxpayer.” He said he was “less sympathetic to the special interests, in terms of tax policy.”

“We’ve been handing out tax credits to everybody and their Uncle Bob over the past few years,” he said.

We have? I never got one…then again, my name isn’t Bob and I’m no one’s uncle. So maybe I didn’t qualify. So what’s on Petersen’s radar?

Petersen took specific aim at the legislature’s repeal of the estate tax, which Kaine signed into law in 2006. Dubbed by opponents as the “death tax,” the abolition of the levy applied posthumously to large estates cost Virginia about $150 million a year. Mark Warner, Kaine’s predecessor and now a U.S. senator-elect, had vetoed a repeal of the estate tax in 2003.

The Fairfax lawmaker also suggested that land conservation tax credits were no longer as critical because of the real estate market downturn.

Chap is a good an interesting Senator. He’s strong on issues like budget transparency, which puts him light years ahead of many of his colleagues. And he did manage to send Jeannmarie Devolites Davis to the great RINO boneyard.

But bringing back the death tax? That’s a non-starter. Stephen Moore penned an op-ed for the Virginia Institute for Public Policy on the death tax back in 2002. I suggest Chap and friends re-read it to see why the tax was a bad idea that deserved to, well, die, in 2006.

There are a number of sensible steps the General Assembly can take to balance the budget. Slapping a tax on the assets of the dead isn’t one of them. How about education tax credits for school choice? Could save the state billions while actually doing something for the children.

But the idea that the taxes are on the table, at least in Democratic circles, is very, very interesting, and offers Republicans that rarest of opportunities: reclaiming the high ground on a meat and potatoes issue.

Whether they seize it is another matter entirely.

(cross-posted at Tertium Quids)