Tuesday, July 5, 2011
Governor Signs Ohio Estate Tax Repeal
Governor Kasich signed the repeal of the Ohio estate tax into law on Thursday, June 30. As is common with contemporary tax bills, the law’s effective date is delayed until January 1, 2013 – approximately one and one-half years away.
There are different ways of looking at this issue. Ohio exempts the first $338,000 of the estate’s value and maxes-out at 7% on estates over a half-million. Ohio’s argument has been that it exempts the vast majority of estates in the state. In fact, over three-quarters of the tax raised is on estates over $1 million. The Ohio estate tax is peculiar because Ohio shares the estate tax with the localities in which the deceased resided. In Cincinnati, for example, this sharing amounts to almost $13 million per year. Cincinnati will, of course, face budgetary pressures.
An alternate perspective was provided in a study from Duquesne University which estimated that state and local governments lose approximately $3 in non-estate tax revenues for every $1 increase in federal estate tax.
I have been in Cincinnati for over 20 years. I grew up in Florida. I can tell you that we have moved clients to Florida, but we have never moved clients to Ohio - or to Kentucky. Do taxes override all? Of course not. I would not be working in Cincinnati - where we have both state and local taxes - if that were the case. But let's not be silly by arguing that taxes do not have an impact.