Ohio's estate tax should be laid to rest
This “death tax” was originally instituted to serve two functions: to raise additional revenue for the state and to prevent the “rich” from passing on their wealth to heirs. However, estate taxes have a minimal impact on a state's budgetary revenue and actually have a counterproductive effect by pushing the rich to take their capital and investments to low-tax states.
Ohio is one of only 23 states that still tax your death. The modern-day logistics of this tax are hazy, because it actually punishes individuals for productive behavior. In reference to the federal estate tax, Arthur Laffer [founder and CEO of Laffer Associates, an economic research and consulting firm in Nashville, Tenn.] explained this dichotomy best in an opinion piece in the Wall Street Journal: “Today in America you can take your after-tax income and go to Las Vegas and carouse, gamble, drink and smoke, and as far as our government is concerned that's just fine. But if you take that same after-tax income and leave it to your children and grandchildren, the government will tax that after-tax income one additional time at rates up to 55 percent.”
In effect, the estate tax repels individuals who own businesses or have accumulated capital, for fear of being unjustly taxed twice. With differential estate taxes between states, Ohio is once again stagnated by its high taxes as more jobs leave our borders for better tax environments.
It is clear that Ohio is suffering more industry loss and population exodus than other states. Ohio ranked 49th on the 2009 ALEC-Laffer Economic Performance Index, only topping Michigan. As the Ohio Legislature seeks ways to attract, create and retain jobs, we must address the role the death tax has played in Ohio's economic decline.
As part of “The Future of Ohio” that my House Republican colleagues recently unveiled, House Bill 326 would reduce Ohio's estate tax liability and give local municipalities all estate tax revenue. Introduced by Representatives Jay Hottinger and Cheryl Grossman, this legislation would encourage seniors and business owners to remain in Ohio instead of leaving to retire in better tax environments.
This bill is a key part of “The Future of Ohio,” which includes ten bills that aim to stimulate economic growth by encouraging small business growth and job retention. Reducing Ohio's estate tax is especially important because we cannot afford to have any more mass relocation of Ohio residents. With the introduction of House Bill 326, my colleagues and I hope to minimize this economically damaging tax so Ohio can retain jobs, businesses and capital.
To revitalize Ohio's economy and assist our home-grown small businesses, we need to retire the estate tax that punishes our residents upon their deaths. As your state representative I continue to seek ways to retain our Ohio residents, bring new jobs to our state and encourage the small businesses in our communities.
If you have any ideas how the Ohio House can improve the economy, or if you have any questions or comments regarding “The Future of Ohio,” please do not hesitate to contact my office. You may write to me at Representative Nan Baker, 77 S. High Street, 10th Floor Columbus, Ohio 43215. You may also email me at District16@ohr.state.oh.us.