Interesting editorial in the Wall Street Journal:  Estates of Virginia:

Only a few years ago nearly every state taxed estates at death, in part because a federal tax credit allowed states to keep part of the revenue that would otherwise go to Uncle Sam. Last year the federal tax credit was abolished and in two dozen states the death tax died along with it. But not at first in Virginia, which had decided way back in 1978 that it would go on collecting its death tax even without the benefit of a federal tax credit. Not any more.

The Tax Foundation’s Tax Policy Blog followed up with an interesting post:  Virginia Repeals Estate Tax and Increases Competitiveness:

There are many reasons to oppose federal and state estate taxes. One that is sometimes overlooked is the damage an estate or inheritance tax does to a state’s competitiveness. Now that 24 states no longer levy estate taxes, states that continue to impose estate or inheritance taxes may have a hard time attracting or keeping retirees and business owners who wish to pass the business on to their children….

Estate taxes have a disincentive effect on entrepreneurship, force the sale of family businesses and farms, and impose high tax compliance costs—all for a relatively small amount of revenue. Virginia’s desire for a competitive tax system has also led it to a more principled tax system.

We previously blogged an excellent new article on the subject:  Jeffrey A. Cooper, Interstate Competition and State Death Taxes: A Modern Crisis in Historical Perspective, 33 Pepp. L. Rev. 835 (2006).