Our “friends” at the pro-government-regulation-and-taxing-of-business think tank Policy Matters Ohio are trying to resurrect a tax that died in 2013 and should remain dead and buried. Taking its cue from Policy Matters, the Akron Beacon Journal editorialized last week that Ohio should reinstate the estate tax, a.k.a the death tax, in order to make the overall tax system more equitable.
To be blunt, this is a terrible idea. Prior to eliminating Ohio’s estate tax, the legislature heard from a number of small business owners, including members of the Ohio Chamber’s Small Business Council (OSBC), about the negative impact federal and state estate taxes have on the their companies. OSBC member Charlie Conner, CEO of Alcon Tool in Akron, testified that he had to establish an irrevocable trust and a buy/sell agreement to minimize the impact of the “death tax” on his business, as well as to protect his wife and family financially at the time of his death. He acknowledged he was lucky that he had been educated in estate planning and asset preservation so that, if he died prematurely, the best interests of his family would be served. Many others were not so fortunate, and would not be if the death tax were reinstated.
Another OSBC member, financial and estate planner Tom Pitrone, explained to legislators in 2013 that Ohio’s estate tax was not merely a concern of the so-called “wealthy.” He said his firm dealt with not only small business owners, but with the broader category of middle-market families, whom he called successful savers. He noted they are typically two-income families, live frugally, save prudently, live in a nice but modest home, and have amassed a nest egg that will provide for them in retirement. He concluded by saying, after doing a social security and estate tax review, his clients ask, “what is the next step in the escape Ohio estate tax process?” He asserted that once a person asks these types of questions, very few, if any decided to stay in Ohio.
Ohio is still having stagnant population growth and one reason for that is the state’s difficulty in keeping its share of the young people who graduate from our high schools, colleges and universities. Another component of that loss of population is the number of financially well-to-do retirees who leave the state due to the negative impact of Ohio’s state and local income tax rates. Unfortunately, re-imposition of a state estate tax would only make Ohio’s task of reversing the trend of continuous and significant population loss more difficult. Keep the Ohio death tax where it is- buried and gone.