Ohio’s Death Tax Should Be Repealed
From a subscribers-only Forbes.com article (HT to an e-mailer) – Ohio’s estate/death tax is doubly out of step with most of the country.
First, it exists:
Twenty-three states and the District of Columbia impose their own estate or inheritance taxes on money left to anyone other than a spouse.
Note below that states without death taxes include biggies California, Texas, and Florida:
Second, it kicks in at a ridiculously low level (bold is mine):
While the federal estate tax doesn’t, generally, hit estates of $2 million or less, most of the state levies kick in at lower levels. Ohio, for example, exempts just $338,000 from its estate tax. New Jersey, Rhode Island and Wisconsin exempt $675,000. Nine other jurisdictions, (the District of Columbia, Maine, Maryland, Massachusetts, Minnesota, New York, Oklahoma, Oregon and Tennessee) exempt $1 million. Pennsylvania imposes its quirky inheritance tax on every dollar not left to a spouse, with the rate dependent on who gets the money.
Though not specifically stated, Ohio’s death tax exemption level may be the lowest in the nation. Additionally, Ohio’s tax can be assessed when one spouse dies, even if the other is still alive (federal law, on the other hand, allows an unlimited marital deduction). This is not soak-the-rich stuff. It’s not out of line to think that mid-market homes are being sold, or (further) mortgaged, just to pay state death taxes, even when no federal death taxes are due. That’s ridiculous.
At an absolute minimum, the exemption should be raised to $1 million. Even better, the exemption should get in sync with the federal level ($2 million currently, increasing to $3.5 million by 2009).
The best idea: Repeal it. The $72.1 million in death taxes Ohio collected in the past fiscal year is less than 0.3% of total revenues (tax amount is from the Ohio Office of Budget and Management’s Monthly Financial Report dated July 10, 2007, which covers the entire fiscal year that ended on June 30).
The well-documented out-migration by retirees to Florida and warmer climes, which are and not coincidentally also death tax-free, needs no additional stimulation. Those who decide to stay will usually be net contributors to the state’s economy. Anyone who votes with their feet and leaves the Buckeye State is lost — usually forever.
That map is great. A picture is worth 1,000 words.
Comment by bill sloat — August 2, 2007 @ 9:20 am
#1 Bill, don’t call the movers just yet.
Comment by TBlumer — August 2, 2007 @ 9:23 am
They gotcha coming in, they gotcha going out…
Two words: Fair Tax legislation. If Jim Jordan, John Boehner, Steve Chabot & Jean Schmidt are true fiscal conservatives, they will sign onto FT. If they don’t like something about it, then they should roll up their sleeves and write an amendment.
I’m so disgusted with our situation…and the folks who claim to be on our side but will not put up or co-sponsor any REAL, REFORMATIVE conservative legislation.
Comment by Rose — August 2, 2007 @ 10:32 am
#3, and everywhere in between…
The Fair Tax is an idea whose time should come.
Comment by TBlumer — August 2, 2007 @ 10:49 am
Tom;
The death tax issue has been with Ohio for a long time. Many have complained about it for a number of years; YET….YET, it is the REPUBLICAN controlled General Assembly that has done nothing to resolve the issue. ORP are a bunch of timid little men and women too fearful to do the right thing.
And for all of you Republicans out there, ask yourself, if the Democrats controlled both houses do think they would be fearful of RAISING TAXES? Heck no, they’ll do it in a heart beat. So why doesn’t the ORP become the party of low taxes? ANWSER: NO SPINE! But yet by reducing the tax burden in the long term they would be helping Ohio, rather than in short term they do nothing and appease Democrats.
BENNETT: READ MY LIPS, NOT ONE RED CENT UNTIL YOUR FLOCK STARTS BEHAVING LIKE REPUBLICANS!
Thanks for calling this to our attention.
Comment by Brian — August 2, 2007 @ 11:12 am
According to this wikipedia article (Ohio Estate Tax), the tax can kick in at any level.
Comment by Porkopolis — August 2, 2007 @ 3:15 pm
#6, From the early part of the Wiki entry — “The tax rates are shown in the table below but because of tax credits, the effective lower limit on taxable estates is currently $383,333. Ohio also allows a ‘marital deduction’ equal to the net value of any asset passing to the surviving spouse.”
Comment by TBlumer — August 2, 2007 @ 3:40 pm
Brian, you are spot on, and I am afraid that we will suffer more critical losses before the GOP even thinks about addressing the dysfunction that got their keesters kicked last year.
If they will not listen to the people, then they will suffer the consequences, period. As such, we should prepare now for the impending doom of another Clinton presidency.
BTW, is that how one spells “keester?” lol.
Comment by Rose — August 2, 2007 @ 5:48 pm
Keister is probably more correct. It means suitcase.
Comment by triticale — August 4, 2007 @ 7:31 pm