Death Tax Proposed for Virginia

by Hans Bader

Lawmakers in both houses of Virginia’s legislature have proposed an estate tax. That’s a tax on what residents own at the time of their death. The proposed tax, set at hefty rates not seen since the 1970s, would affect the inheritances of many middle-class people.

Virginia had an estate tax until July 2007, when the Republican-controlled legislature allowed it to be effectively repealed. But this year, the Democrats took control of both houses of the Virginia legislature. And two Democratic lawmakers promptly proposed reinstating and increasing the estate tax, to a higher level than in 2007.

The tax is contained in two bills: SB 637, proposed by Sen. Scott Surovell, D-Mount Vernon, and HB 736, sponsored by Del. Vivian Watts, D-Alexandria.  (The bills would exempt “closely held businesses” to avoid decimating small businesses on the owner’s death.)

The tax is not set to the level of 2006 or 2007, when few American estates were even subject to the death tax, and tax rates were not at their peak. Instead, it would be set as it was back in the 1970’s, when estate taxes were at their most burdensome and affected the largest number of middle-class households.

The tax is set as equal in size to a “federal credit” that was allowed for state taxes “by § 2011 of the Internal Revenue Code as it existed on January 1, 1978.” Why 1978? As you can see from figure F of this IRS publication, the estate tax peaked in that part of the 1970’s, affecting many (although not most) middle-class people — a higher percentage of Americans than at any other time in history.

The tax is supposedly for “healthcare purposes.” You might wonder, does Virginia even need this tax to pay for healthcare? The state’s healthcare spending is already financed with income tax and other revenue. And a majority of the state’s spending on Medicaid — the vast bulk of its healthcare spending — currently comes from the federal government.

Moreover, Virginia’s governor has already proposed a number of other tax increases that are certain to become law, such as a cigarette tax increases, a gas tax increase, and a repeal of state income tax deductions. There seems little impediment to these other taxes becoming law, because the governor, like legislative leaders, is a Democrat.

Virginia also faces considerable spending pressure. The governor’s proposed budget represents a whopping 20% spending increase between Fiscal 2019 and Fiscal 2022. And legislative leaders are further to the governor’s left, and want to increase spending even faster.

The estate tax might enable legislative leaders to increase spending at an even faster rate than the 20% sought by the governor. But it is unlikely to provide a stable, permanent funding stream for any new healthcare entitlements the legislature may create. That is because healthcare spending rises faster than inflation, while death tax revenue can rise much slower than inflation as some old people relocate to other states to avoid having their estates taxed. (For example, Trump recently changed his legal residence to Florida, which has no estate or income tax).

So healthcare entitlements tend to gradually outstrip any single tax earmarked to pay for them. Inevitably, they end up being financed more and more out of a state’s general fund, not just one specific tax.

The legislation to reinstate and increase Virginia’s estate tax has a real chance of becoming law. It is sponsored in the House of Delegates by Vivian Watts, a veteran legislator who managed to pass over a third of her bills last year, including a key tax bill, even though the legislature was controlled by her Republican opponents. It is sponsored in the state senate by Scott Surovell, who managed to pass 30.6% of his bills in 2019, even though he and other Democrats were in the minority back then.

This legislation had no chance of passing when Republicans controlled the legislature. But they are now in the minority. They will presumably continue to oppose this legislation. In the past, they have cited arguments by the Tax Foundation and others that death taxes are bad. The Tax Foundation says death taxes “reduce investment,”  “drive wealthy taxpayers out of state” (which cuts state income tax revenue), and forces people to waste lots of time and money on “estate planning and tax avoidance strategies” that “create dead-weight losses.”

Back in 2007, some moderate Democrats also supported the repeal of the death tax. But many of those moderates are no longer in office.

Hans Bader is an attorney living in Northern Virginia. This post was published originally in Liberty Unyielding.

Correction:  The death tax bills likely will not impact middle class. See update: “Virginia Death Tax Would Be Fairly Narrow.”

For more discussion of the Virginia death-tax proposal, see:A Sure-Fire Formula for Chasing Away Affluent Retirees.

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49 responses to “Death Tax Proposed for Virginia

  1. Another good reason for Virginians of any means to join President Trump in Florida.

  2. Or in North Carolina, one of those states that don’t tax government retirees. Income inequality is a serious political issue across the Nation, but a death tax is one economically-inefficient way to chip away at that problem, especially one that can be avoided simply by moving to another attractive retirement State.

  3. Trust me, interesting and alarming tax proposals are pouring in. Most won’t go anywhere unless the Guv or some other major group (the Black Caucus) gets behind them. This one deserves attention because Delegate Watts is now chair of House Finance. She has one bill in that I like and will support (stand by.)

    Bill introduction deadline is still a week away. We are already at 2500 of all types and I predict a major record broken by next week.

    • Steve – your comment is highly informative. It is also unfortunately quite ominous. It appears we stand on the edge of drastic change in nation.

    • Steve –

      Should your future posts provide us with a broad survey of the tenor and tone of these 25oo++ bill proposals, we would be able to gauge where the new leftists in Virginia want to take the state, and nation, too.

      Since leftists typically move in lock step, your post would also give us a reading on where America’s new leftists intend to take other states and the nation, and how far and fast.

      Leftists now are threatening to sweep the nation, like they’ve already swept many of the nations institutions like mass media, journalism, higher and K-12 education, and most of the non-profits in America. Now much more is threatened in a growing wave.

      Read Kimberly Strassel in today’s Wall Street Journal. There she has a very informed description on the breath, scope, and pace of the leftist takeover of America, and its policies, should leftist gain power not only of domestic policy but now too of foreign policy. These new potential shifts are frightening to contemplate. For example,

      Kimberly Strassel in her article titled “There’s No Peace From the Doves, Democrats show they’ve lurched left in foreign as well as domestic policy”, says:

      “The primary contest to date has served mainly to highlight how far left Democrats have lurched on domestic policy in the few years since Barack Obama. The Iran conflict has now exposed a similarly dramatic shift in foreign policy. Where progressives these days lead, even the “moderate” Joe Biden follows.

      The targeted killing of Maj. Gen. Qasem Soleimani led the progressive moment to go full flower child. Thanks to desultory debate moderators, Americans until now had little idea how Democratic aspirants would specifically respond to terrorism or other provocations. The Soleimani moment proved clarifying.

      Voters now know that a President Bernie Sanders would not take action against Iran or other rogue regimes, no matter how many red lines they cross. Mr. Sanders will take no step that might bring us anywhere closer to “another disastrous war” or cost “more dollars and more deaths.” A President Elizabeth Warren would similarly offer a pass to leaders of U.S.-designated terrorist groups, at least if they have an official title. The Trump strike, she said, amounted to the “assassination” of “a government official, a high-ranking military official.” …”

      Virginia is proving a bell weather state for telling the nation where it is headed should these leftist gain power in other states, and the WSJ’S Kimberly Strassel tells us how that state power could easily translate into an abrupt and disastrous turn in American foreign policy as well. This would surely include yet another hollowing out of America’s military, posing another economic recession for Virginia, which of course would be among many setbacks for America.

  4. On the issue of whether the tax itself is legitimate – even the Feds tax estates – but the threshold is something like 11 or 12 million and it does not apply at all to the surviving spouse.

    And the Feds DID have the opportunity with the TCJA to completely do away with the estate tax – and they did not.

    And the folks that have more wealth than that – get expert advice on how best to shelter their assets – often through trusts.

    Keep in mind the Stepped Up Basis also which means the appreciated value of an asset is not taxed at the time of the inheritance.

    The Virginia bill exempts small businesses and family farms also.

    What I’d like to know more about is how many people are affected by the proposal and how much in taxes would be collected – BECAUSE as several have noted – people WILL act to shelter their assets the most advantageous ways that expert advisors can find and that includes moving one’s residence.

    I’m not sure if this is covered by conformity or not but that would be one less onerous and punitive way of doing it.

  5. Ah, the misleading “20% increase” has taken hold! It is not surprising because that number serves the purpose of people who don’t like taxes or government spending in principle. See how the “20% spending increase between Fiscal 2019 and Fiscal 2022” (which is accurate, but misleading on its face) morphs into “the 20% sought by the governor” in the next paragraph. I have taken issue with this characterization of the budget in earlier posts, so I won’t do it here again. See

    And that old canard “death tax” is back. It is not a tax on the dead; it is a tax on the living survivors. There may be legitimate arguments against the estate tax. But, why is inherited money not income, the same as income from the sale of stocks or income from a job? And why should inherited money be exempt from taxation while money earned from being a corrections officer or as a teacher be taxed?

    Having experienced the bite of the estate tax, I do have experience in this area. The only limiting provision I would offer would be that survivors should not have to sell off assets in order to pay the estate tax. For example, if the bulk of the value of an estate is in land or other property, the survivors should not be subject to an estate tax right away. However, if that property is ever sold, the proceeds of the sale should be subject to the estate tax (and any capital gains tax applicable).

    • Deep State Dick emerges 🙂 No one in my middle class family has ever needed to consider the death tax….And on that other thing, all I’ve written is that the bottom line amount for appropriation in the introduced budget is 20% higher than the same figure in the same bill introduced two years ago. It has grown 20% in one cycle, or in two years, however you want to state it. Incontrovertible. It must be a powerful talking point, it has you so energized…..

      It is also incontrovertible that few wealthy people with brains fail to find a way to avoid inheritance taxes, something that will be explained to these patrons and the bills will go away.

      • There are so many tax loopholes that few wealthy people with brains don’t find a way to avoid much of the tax burden that the rest of us have to deal with. (We were hit with the estate tax because my father-in-law loved to accumulate farm land and he died before the minimum threshold on the federal side was raised. The land was in Halifax County. Anybody want to buy some nice wooded acres in Halifax County?)

    • “But, why is inherited money not income, the same as income from the sale of stocks or income from a job? And why should inherited money be exempt from taxation while money earned from being a corrections officer or as a teacher be taxed?”

      Because in one case, wealth is moving around within the family. In the other, it is moving between a government and an individual. Many of our current political dumpster fires over taxation are fueled by the fact that there are at _least_:

      1) people who see taxation as a matter between individuals and “the government”
      2) people who see taxation as a matter between families and “the government”
      3) people who see taxation as a matter between hypothetical abstract groups like ethnic or religious groups (as if these were ever homogeneous!) and “the government”
      4) people who see taxation as a matter between geographical communities and “the government”
      and on and on.

      Most of us are a little of each, but more of one than the others. I can’t say that _I_ have worked out how _I_ fit these different frameworks together coherently, let alone how we should do it as a Commonwealth, and I frankly doubt that many of our esteemed assemblycritters in Richmond have either.

  6. Can anyone explain in layman’s terms how this works? I’m having difficulty understanding the linked IRS publication. For 1978 it appears that there is an 18% tax on value over 134,000? I can’t be reading that correctly can I? What threshold is the tax going to kick in on estate value and at what percentage?

  7. If an honest debate on the merits is the want – then the 20% folks need to provide specifics on where the 20% increase in revenues is actually coming from because a 20% increase in the budget means a 20% increase in revenues.

    The anti-tax folk really don’t care about specifics… they pretty much think ANY increase beyond inflation/population growth is not acceptable and so they pretty much argue against from the get go.

    Let me give just one example. Since all these mass shootings that have occurred at schools – it has resulted in the schools asking for more “security” personnel – often active or retired law enforcement.

    My question is – when something like this happens -do we say you can’t do it unless you squeeze money out of other parts of the budget or do we just fund these new positions ?

    The same is true of VDOT. They are getting less and less revenues as a result of more efficient cars. Do we take a position than any increase in the fuel taxes is unacceptable on the face of it because it is an “increased tax”?

  8. Let’s see. One of the biggest complaints from residents of Fairfax County is that we receive pennies back from the tax dollars sent to Richmond. If the estate tax is enacted, much more tax revenue will be generated in Fairfax County than in other parts of the state. Watts and Surovell are working against one of the biggest gripes of their constituents.

    All to help bail out the lying, racist governor. Not even man enough to admit it was him in the photo.

    • I’m tired of that meme. I know I can’t stop it, and I’ve slipped myself, but I’m just tired of it. I’ve jumped others for falling into ad hominem fallacies and this is the same. He who is without sin…..There is PLENTY to argue with His Excellency over on policy, and no indication the administration asked for or will support these bills.

      • Steve – understand your weariness, but there comes a point when state policies taken all together amount to little more that legalized theft to buy votes and/or reek revenge for someone’s perceived grievance. And at some point most know it when they see it. I am beyond that point now, given what has happened to date.

      • There is ample evidence that Ralph Northam, only a short time from graduating with an M.D. degree and becoming a licensed physician appeared in blackface and had a photo of same published in a medical school yearbook. Moreover, despite his actions, he campaigned for governor by attacking his opponent as a “racist” largely for insisting that the nation’s immigration laws be enforced.

        Then when the facts were exposed, Northam first admitted his guilt but quickly lied and denied the photo was his. Subsequently, instead of taking personal responsibility and making personal amends, Northam has taken advantage of his power as governor to engage in virtue signaling and bribery by proposing spending to appease left-wing groups.

        Yet, we are all supposed to put that in the past, unlike what happens to Republican officials when their past bad actions come to light.

        I can only conclude that you accept double standards and believe Northam should get a pass for adult behavior from which no other elected official would be excused.

        Northam is beyond the doubt the most disgusting elected official I’ve seen in 60 plus years.

        Editor’s note: I have deleted a gratuitous insult from this comment, and I will intervene in other comments, regardless of who wrote them, to delete similar insults in the future. TMT, I really appreciate your contributions to this blog, but I won’t tolerate insults and name calling.

    • It’s a big complaint with no real basis and it becomes, for Conservatives in NoVa the excuse for no new taxes..end of discussion.

      Most folks in NoVa, according to polls ARE willing to pay more for transportation and education.

      THe big NoVa tax complaint is about the composite index which is really not about a specific tax but about how state money collected at the state level is allocated back to localities.

    • re: ” All to help bail out the lying, racist governor. Not even man enough to admit it was him in the photo.”

      TMT , have you ever met a Dem you liked? 😉
      You’re so far hard right these days I bet you’re in the 1% of NoVa folks!

  9. New Jersey recently bumped up gaso taxes in order to reduce punitive estate taxes. Be interesting to compare. I do think the change probably stemmed some of the tide of residents leaving NJ.

  10. TBill –

    Watch Virginia implode if it continues the reckless course it is on right now. See, for example, this from Wall Street Journal a few days ago;

    “The Census Bureau and IRS last week also released state population growth and income migration data for 2018 that show the exodus from high-tax to low-tax states is accelerating. Four states have lost population since 2010 including West Virginia (-3.3%), Illinois (-1.2%), Vermont (-0.3%) and Connecticut (-0.2%), but 10 experienced declines last year. New York was the biggest loser as a net 180,000 people left for better climes. Over the last decade New York has lost more of its population to other states (7.2%) than any other save Alaska (8%), followed by Illinois (6.8%), Connecticut (5.6%) and New Jersey (5.5%).

    Hmmm, what do these states have in common? Large tax burdens and politically powerful public unions. Illinois’s property tax rates are the second highest in the country after New Jersey. The state lost $5.6 billion in adjusted gross income last year to other states, about twice as much as in 2012. Notably, income outflow hasn’t increased from Michigan or Wisconsin.

    Illinois’s 4.95% flat income tax is lower than many of its neighbors, but Democrats are pushing a state constitutional amendment on the November ballot for a progressive income tax. Voters should look how that’s turned out for other high-tax states.

    New York’s 12.7% top marginal rate is the second highest in the U.S. In the last two years New York has lost a net $18 billion in adjusted gross income. The wealth exodus is reducing revenue and making it harder to fund programs like Medicaid. As Gov. Andrew Cuomo groused last year, “Tax the rich, tax the rich, tax the rich. We did that. God forbid the rich leave.” …

    “Then there’s California, where the 13.3% top rate on individuals making more than $1 million is the nation’s highest. Democrats in the Golden State have long proclaimed that raising taxes on the rich won’t make them leave and they flog old data showing that more high earners moved into the state than left.

    No more. …”

    For more see:

  11. I remember a political science course I had in college in which the consensus of writers believed that there should be no law that the vast majority of folks don’t agree on. A recent example might be the recent 417 to 3 vote in the House stepping up enforcement against Robo calls. Without suggesting that laws need to be passed by such a wide margin, how do we suppose the governor’s proposals on guns, taxes, and spending measure up to a “vast majority” standard? Did this principle influence the founders when they set up the Senate? What is the impact on society when a narrow legislative and executive majority pass laws that have only narrow majority support or that take advantage of a minority of society? What happens when a narrow voting majority thinks it’s just fine to take assets from a minority? What happens to a society when receivers of government largesse constitute a voting majority that wants to continue that largesse at the expense of the productive minority? I think the answer is simple: bad things.

    • I actually think the same things Crazy – but for the GOP critters also and I can rattle off a bunch of issues with large support that the GOP will not act on.

      But the answer to your question is – elections and I support citizen-initiated referendum with caveats.

      Conservatives like to cite issues they think have widespread support that Dems won’t support – I see the opposite!

    • If we are going to use this as a basis for legislation, it should be applicable to Congress, as well. I point out that the TJCA passed the House by a vote of 218-206 and the Senate by a vote of 51-48.

  12. (cough) Virginia has an”estate tax” at this time
    It is $0.10 on every $100

  13. Ah, one of my favorite points of discussion, where most fiscally conservative capitalists fall into a crevasse, logic-free. I’ve long held that a death tax is the best way to keep the government out of my pockets while I’m living, working, earning, investing. The disproportionate accrual of capital needs balancing over time, and this is an excellent way to keep a level playing field (one of the tenets of capitalism/meritocracy). Rewards for my work need not be bestowed on my heirs, they should do their own work.

    Not a fan of ADDING a death tax within a system that has dozens of other taxation methods in place. My tax policy platform, if elected, would be a death tax in lieu of income tax, use tax, sales tax. Might have to keep some property tax to work a budget, and that is also in keeping with the balancing of capital, avoiding revolt-scale concentration of wealth at the top.

    Americans have commingled the notion that The American Dream includes doing better than your parents did with leaving your children better off than you were. My take is that the beauty of The American Dream is its equal opportunity/bootstraps and all that, without the gigantic leg-up of inheritance.

    I’m no fan of government/government spending, just one who accepts the inevitable death and taxation. I see a death tax as a way to provide revenue with little impact to the earner, and to preserve a healthy enough socio-economic balance to avoid revolution.

    I’m going to go duck under shelter for the storm of anger that is likely to hail down on this post 🙂

    • Well, all I can say is that even some of my most favorite of all bloggers on this site will occasionally slip and fall, as they be human after all.

      The problems here are several. The biggest one is that respect for private property is the absolute keystone of decent representative government and its respect for the dignity of man and all citizens, and their right to do with their property what they desire, including its disposal after their death. It’s a natural right of man. The death tax is abhorrent and a vile offense to that sacred right.

      In addition, it is a double tax on citizens wealth, and it will waste their estates that otherwise go for wise and good purposes that have provided this country with enormous and unparalleled long term benefits. A death taxes also are a huge slippery slope, leading to many other evils of government, including its vast wastage of other people’s money built on the backs of their own human labor. And of course never would death in any way work as a constraint on other taxes, fees, and other impositions the voracious government and its corrupt politicians can get away with to aggregate ever more power and special privilege for themselves alone.

      • I interpret that Locke intended life, liberty and property rights to be limited to the living; I don’t see how we can bestow immortal rights. If the dead control property, then it may impinge the pursuit of life, liberty, and property for the living. Seems that this leads to aristocratic, feudal structures, eventually.

        A death tax need not be a sweep of all property to the state, there are ways to finesse it, only to meet the minimal needs of state, not an abject transfer of all. Also, my notion excludes this as a double tax–state has to pick its poison, cannot tax everything on the way in and then again on the way out–that is abhorrent.

        Tax policy deep dive is the least sexy item for the current American electorate. For NJ (recently shifted from R to D) to adopt a gas tax is regressive, impacting the poorest the most. This shows why an effective death tax would need to be implemented federally and then distributed to each state from which it was collected. Otherwise the money will simply

        • “I interpret that Locke intended life, liberty and property rights to be limited to the living; I don’t see how we can bestow immortal rights. If the dead control property, then it may impinge the pursuit of life, liberty, and property for the living. Seems that this leads to aristocratic, feudal structures, eventually.”

          A thoughtful comment. It’s also likely one reason for the Rule Against Rule against Perpetuities that’s evolved out of 17th century English Common Law concurrent with Locke. But I doubt he would find today’s practices in question congenial with his philosophy. Not sure about that however. I need further study there.

          Acbar, where are you?

    • Interesting argument, Lift. I don’t like the idea either of self-perpetuating financial aristocracies. I might actually agree with you — if revenue from the estate tax were used to reduce some other tax, say, the income tax, to make it easier for people to accumulate wealth. That’s a critical condition. And it’s certainly not one contemplated by Watts or Surovell.

      • “That’s a critical condition. And it’s certainly not one contemplated by Watts or Surovell.”

        Yes, I could agree in limited cases, particularly if it were wisely limited, apportioned and distributed and if it be allowed to remain in effect, but that will never happen. It’s not how governments work or end up working over time.

      • “I don’t like the idea either of self-perpetuating financial aristocracies.”

        Nor do I agree. Look at the Ford Foundation. It’s a leftist activist operation, precisely what Henry Ford despised. So these sorts of “perpetuating financial aristocracies” need to be broken up, and more tightly focused on original intent, but surely there is a better solution than giving these monies away to the government so politicians and bureaucrats can waste it, sell it off for votes and favors.

  14. Expressed on this post …
    “Income inequality is a serious political issue across the Nation, but a death tax is one economically-inefficient way to chip away at that problem, especially one that can be avoided simply by moving to another attractive retirement State.”

    “And why should inherited money be exempt from taxation while money earned from being a corrections officer or as a teacher be taxed?”

    Not sure that the estate tax will do the job as most find ways around it. So … given that “In September 2019, the Census Bureau reported that income inequality in the United States had reached its highest level in 50 years,” and that the cuts in the tax code have enhanced the inequality problem, and that several old standby revenue sources are bringing in less revenue … what can we do to fund our community in a fair way regardless of the size of the budget?

    Certainly the estate tax is one way, but how about a wealth tax? The wealth tax is based on the idea that wages shouldn’t be the primary revenue source. Ity is an attempt have that increasingly high proportion of the population whose wealth is not based on wages pay their fair share. I have not read the details, but Warren and Steyer have both talked of creating a wealth tax.

    Another way would be to raise the rates on high earners, but that cements the differentiation between wages and other wealth. I am old enough to remember the very high tax rates that were in effect in the 60’s … 70% on top dollars earned, I believe.

    Finally, as someone who had a job writing taxes for several years, a whole lot of ‘fairness’ could come from doing something about both business and personal write offs. Do you all know that we give the oil industry $20billion in tax write offs every year? A big portion of that is money spent to find new oil while we argue about putting a price on carbon? CRAZY!

  15. I believe the only “inequality” our government, at any level, should be concerned about is political “inequality.”
    Any other efforts at social engineering (and that is what we are talking about) away life’s common economic variances under the cloak of such vague terms as “inequality” and “fairness” I believe falls beyond our governments’ brief, and certainly requires an omniscience it has never demonstrated in its past actions.

  16. More Good Gravy … First question …
    Is fair taxation ‘social engineering? Is it important to fund our community with taxes that are fairly dispersed or are you a flat tax … soak the middle class … advocate? Or is community, education, roads, police forces, the DOD simply not important? Certainly we can argue about the level of that support BUT can’t we reach a decision about what is a ‘fair’ and reasonable way to fund them?

    From my point of view those business tax write offs represent the worst kind of social engineering. We created many of the fossil industry tax breaks over 100 years ago in order to help the oil industry of Mr. Rockefeller get up and running. However, we are still allowing businesses to make decision that include the effects of those 100 year old tax breaks. Not exactly the ‘free market’ that you Conservatives rail about.

    ‘Social engineering’ as a hot button term should be applied to the tax giveaways corporate money in politics has created. The Founders understood greed and power and tried to set up a system that could counteract the ability to wield political power. Guess they didn’t foresee the level of corporate money power we have watched accumulate since WWII and Ronald Reagan.

    • Jane, I’d like to know a little more history. When you talk about the 100-year-old fossil fuel “subsidies,” are you referring to the oil depletion allowance (and analogous allowances for coal and gas)?

      As I understand those allowances, they reflect the depreciated value of the mineral holdings as the minerals are extracted. From a legitimate tax accounting standpoint, how else would you reflect the depreciated value on the balance sheet? And how different is that allowance from the way minerals like copper, iron, lead, zinc, etc. are treated from a tax accounting perspective?

      Is that “social engineering” or just reasonable accounting?

      • bigger question – is the fossil fuel industry treated differently that other industries on taxes?

        re: “social engineering” vs “reasonable accounting”


        would you argue that the tax code itself is “reasonable accounting”?

        I’m not sure how I feel about taxing inheritances….

        Take the tax policy on gift taxes – you can give 15K tax free but after 15K -it IS taxed.

        The federal estate tax generally applies when a person’s assets exceed $11.4 million in 2019 and $11.58 million in 2020 at the time of death. The estate tax rate can be up to 40%.

        so it’s not like there is ambivalence in taxing accumulated assets that are transferred. It’s in the basic tax code to tax them but some of it is excluded as “social engineering” I presume.

        But people can often largely avoid this with trusts and other vehicles… it’s almost it’s for folks who did not plan ahead.

      • I cannot tell you about other mineral resource tax expenditures, or other industry in general. What I can say is that many policy people have argued that tax write offs are the wrong way for the government to encourage the development of new technology.

        The thing about using the tax system to help grow an industry is that the write offs tend to remain on the tax rolls way past their usefulness as a new industry boost. Also, because they effect the non-collection of taxes they are not very visible to the legislators or the public. At a $20 billion annual total there is a very big mismatch between continuing these giveaways and the need to reduce GHGs.

        Regarding the fossil industry … the 2 biggies that incent new development are:
        1. Intangible drilling oil and gas deduction … $2.3 billion … This is the 100-year old one. … Independent producers are able to immediately deduct 100% of costs not directly part of final operating oil or gas well including exploration and development costs. Integrated companies get 70% immediately and the other 30% amortized over 5 years.
        2. Excess percentage over cost depletion … $1.5 billion … rather than writing off real cost independent producers can write off a percent of gross income as depletion.

        Two accounting trick write offs ….
        1. Master Limited Partnerships … $1.6 billion … a special corporate form that is exempt from corporate income taxes but traded on the stock market. Primarily available to natural resource firms, the majority of which are fossil firms.
        2. Last-in-first-out (LIFO) accounting …1.7 billion … the energy industry holds more than 1/3rd of all LIFO inventory which allows industry to sell most recently acquired inventory and hold onto inventory that cost less, thereby affecting taxes, when the price is rising.

        A third un-competitive issue is the ‘fire sale’ of public lands, in the national forests and on the coast, to the fossil industries … over $2 billion. A fourth is that fines and such can be deducted as a business expense, which were a very big write off for BP’s Gulf Oil Spill. Including clean up costs BP writes off $334 million a year annually.

        The figures are annual and are available with more info and more write off tallies from Oil Change International … “Dirty Energy Dominance: Dependent on Denial”

        • These are interesting points and there’s a lot more to this than I have time to research, but I would point out 2 things I think are true, regardless of the ins and out pertaining to oil and gas industrials. One is that “fair” is perception, not fact, and that is why it stands as the the most divisive word in any debate. Your fair is my burden, and my fair is onerous to you. Secondly, in the long range, the beneficiaries of any oil & gas tax break have been the consumers of fossil fuels. Affordable fossil fuel has benefitted all in the modernized, industrial world.

          • Reed Fawell 3rd

            Very well and truly said.

            Plus these benefits keeping prices low and supply high are likely now greatly decreasing the risk of a great war that otherwise might be far closer to unavoidable.

          • Jane Twitmyer

            Certainly your ‘fair and my ‘fair are mostly probably different. Thing is … as a community we must come up with something we can agree on, and to do that we have to have a discussion.
            If you are not sure of the sources of the information that I put out there, there are other possible responses …

            First, if higher profits kept prices lower in the fossil industries, did benefit all users, but not non-users? Is that OK? It also means competition is skewed, not completely real. Is that a good idea? If fossil companies can deduct any environmental fees charged for non-compliance, does that means that non-compliance is ‘worth taking the risk’? Is that a good idea? If the national leases on fossil lands are let at fire sale prices, aren’t we just depleting the value of the country’s assets and giving it to the fuel users, the corporations and their stockholders? Is that a good idea? And with the caveat that those numbers are correct … then can you agree it is a good idea to stop increasing profits and possibly keeping prices lower when the climate change effects will cost us all a huge pile of money?

            Yes, we agree fossil fuels were the engine of development, but change is here and we all need to step up and find a way forward that we can agree on. I would like to see that path be ‘fair’ and am willing to talk about what that means.

  17. For certain proof of my statement above, namely: “Plus these benefits keeping prices low and supply high are likely now greatly decreasing the risk of a great war that otherwise might be far closer to unavoidable.”

    See this: “DECEMBER 23, 2019
    In 2018, the United States consumed more energy than ever before

    Primary energy consumption in the United States reached a record high of 101.3 quadrillion British thermal units (Btu) in 2018, up 4% from 2017 and 0.3% above the previous record set in 2007. The increase in 2018 was the largest increase in energy consumption, in both absolute and percentage terms, since 2010.

    Consumption of fossil fuels—petroleum, natural gas, and coal—grew by 4% in 2018 and accounted for 80% of U.S. total energy consumption. Natural gas consumption reached a record high, rising by 10% from 2017. This increase in natural gas, along with relatively smaller increases in the consumption of petroleum fuels, renewable energy, and nuclear electric power, more than offset a 4% decline in coal consumption.

    Petroleum consumption in the United States increased to 20.5 million barrels per day (b/d), or 37 quadrillion Btu in 2018, up nearly 500,000 b/d from 2017 and the highest level since 2007. Growth was driven primarily by increased use in the industrial sector, which grew by about 200,000 b/d in 2018. The transportation sector grew by about 140,000 b/d in 2018 as a result of increased demand for fuels such as petroleum diesel and jet fuel.

    Natural gas consumption in the United States reached a record high 83.1 billion cubic feet/day (Bcf/d), the equivalent of 31 quadrillion Btu, in 2018. Natural gas use rose across all sectors in 2018, primarily driven by weather-related factors that increased demand for space heating during the winter and for air conditioning during the summer. As more natural gas-fired power plants came online and existing natural gas-fired power plants were used more often, natural gas consumption in the electric power sector increased 15% from 2017 levels to 29.1 Bcf/d. Natural gas consumption also grew in the residential, commercial, and industrial sectors in 2018, increasing 13%, 10%, and 4% compared with 2017 levels, respectively.”

    For more go to:

    Thank God for fossil fuels. We’d be lost without them plus nuclear.

  18. Interestingly Reed you have just proved my point about corporate political power. Change hasn’t happened because of fossil fuel corporate power.

    A recent missive from Amory Lovins, founder of Rocky Mountain Institute …
    “The path is there, if our leaders will only choose to take it. In 2011, Reinventing Fire, an energy study by Rocky Mountain Institute, where we work, showed how a business-led transition could triple energy efficiency, quintuple renewables and sustain an American economy 2.6 times larger in 2050 than it was in 2010 with no oil, coal or nuclear energy, and one-third less natural gas. The net cost was $5 trillion less than business-as-usual.”

    So … change will cost us less, in many ways, if we take the path I heard him present in 2011.

    More from the missive …
    … “Four European countries with modest or no hydropower get from 46 percent to 71 percent of their electricity from renewables, with grids more reliable than those in the United States
    … Over 35 percent of Iowa’s electricity is wind-generated. This has provided a second source of income to farmers
    … We should base investment decisions on net value, not cost alone. A columnist for The Wall Street Journal, for example, recently pointed to the $400 billion estimated cost of retrofitting American buildings without mentioning the $1.4 trillion net value (retrofit costs minus saved energy costs) of doing so.
    … Much of this value can accrue to working Americans who need it most. Nationally, the average energy burden for low-income families is three times greater than for the rest of the country.
    … Energy efficiency and renewables … offer so many benefits — for competitiveness and jobs, national security and community choice, health and environment, equity and innovation.”

    How much energy we use is not necessarily the issue. Lovins says we have a unique opportunity to fully leveraging the power of the market through smart, trans-ideological policy would make us unstoppable. I just can’t understand why anyone wants to continue the fossil fuel now un-competitive rip off with their huge tax breaks, huge offloaded environmental and health costs, a less reliable grid because it is totally centralized, and the costs of maintaining the fossil trade routes and Middle East production.

  19. Well, Jane, there is progress to report. Your enviro friends don’t ask us to believe the Chinese on these issues so much any more. Now our problem is the Rocky Mountain Institute, though located in Colorado, ain’t much better.

    This faux congregation of dude ranchers ask us now to “reinvent fire!”

    We been there, don’t that, Jane. But your dude friends keep on trying like you say:

    “A recent missive from Amory Lovins, founder of Rocky Mountain Institute …
    “The path is there, if our leaders will only choose to take it. In 2011, Reinventing Fire, an energy study by Rocky Mountain Institute, …”

    Come on, we can’t shoot Grizzlies anymore, and fire spews smoke, so forget it too.

  20. Reed, MORE GOOD GRAVY! … “faux congregation of dude ranchers”?? Do tell who, outside of the distortions in “What’s up with that”, do you believe? Here’s a bit of bio for the head DUDE Rancher who was named one of the world’s 100 most influential people in 2009 by Time Magazine.

    Born in Washington, DC, Lovins spent much of his youth in Silver Spring, Maryland, in Amherst, Massachusetts, and in Montclair, New Jersey. In 1964, Lovins entered Harvard College. After two years there, he transferred in 1967 to Magdalen College, Oxford, where he studied physics and other subjects. In 1969 he became a Junior Research Fellow at Merton College, Oxford, where he had a temporary Oxford master of arts status as a result of becoming a university don.

    Back in the US where he settled in CO, the 1973 energy crisis helped create an audience for his writing. An essay originally penned as a U.N. paper grew into his first book. By 1978 Lovins had published six books, consulted widely, and was active in energy affairs in some 15 countries.

    Lovins served in 1980–81 on the U.S. Department of Energy’s Energy Research Advisory Board, and in 1999–2001 and 2006–08 on Defense Science Board task forces on military energy efficiency and strategy His visiting academic chairs most recently included a visiting professorship in Stanford University’s School of Engineering.

    Amory Lovins has received ten honorary doctorates and was elected a Fellow of the American Association for the Advancement of Science in 1984, of the World Academy of Art and Science in 1988, and of the World Business Academy in 2001.

    Lovins has briefed 19 heads of state, provided expert testimony in eight countries, and published 29 books and several hundred papers. His clients have included many Fortune 500 companies, major real-estate developers, and utilities. Public-sector clients have included the OECD, UN, Resources for the Future, many national governments, and 13 US states.

    Others have raised questions about some of his statements along the way, but I do not understand the basis for your ‘Saturday Night Live’ denigration of this man’s life work. Maybe you should listen to his TED Talk … not a socialist plot by any means!
    … filmed at TED’s offices, energy innovator Amory Lovins shows how to get the US off oil and coal by 2050, $5 trillion cheaper, with no Act of Congress, led by business for profit.

  21. My God, Jane, Lovins is the perfect Colorado faux Dude Rancher, giving real Colorado ranchers a bad and odious name, look at the facts for a change Jane:

    Born in Washington, DC,

    Youth in Amherst, Massachusetts, and in Montclair, New Jersey,

    Harvard College then Oxford (Magdalen College, then Merton College post grad),

    visiting professorship in Stanford University’s School of Engineering,

    Public-sector clients include OECD, UN, Resources for the Future, many national governments, and 13 US states,

    ten honorary doctorates, a Fellow of the American Association for the Advancement of Science, World Academy of Art and Science in 1988, and World Business Academy,

    TED Talk, Time Men of the Year.

    This ain’t no rancher, he’s a deep state globalist Fixer, the elitist Aspen type who has been screwing up America without pause or stop for past fifty years.

    Jane, Stop defaulting to failed authority figures, and rely on yourself for a change.

  22. Well … I rely on myself to find people to believe who actually know what they are talking about and have extensive experience in their field ….

    Lovins doesn’t own a ranch and ain’t no ‘faux rancher’…and he was one of the first onto how to deal with the climate change issue that is going to sink the VA coast where people choose to not believe the scientists who actually studied the topic.

    As I asked before … who do you actually believe when it comes to complicated topics that require study and knowledge?

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