WOOSTER, Ohio — The “death tax” in Ohio is officially dead, or at least it will be as of the 2013 effective date.
Properly known as the estate tax, it dates back to 1968 when it was enacted to replace the state inheritance tax.
Current law assigns a 6 percent tax to estates of residents with a net taxable value of $338,333 or more, up to a $500,000 estate. A seven percent rate applies to estates above $500,000, and estates less than $338,333 are exempt.
But the new bill, signed into law by Gov. John Kasich Thursday night as part of the state budget, repeals the tax beginning Jan. 1, 2013.
Good for farmers
Many farmers are relieved to see the tax abolished and believe they will stand a better chance at preserving their family farms and businesses as they pass them on to the next generation — free of the death tax.
“The American dream includes working hard, investing wisely and spending sensibly so that we can pass on something to our children,” said Jack Fisher, executive vice president of the Ohio Farm Bureau Federation, in a released statement. “Our homes, farms, businesses and other assets have already been taxed, which is why farm bureau felt taxing them again upon the owner’s death was extremely unfair.”
Resistance to repealing the tax came from municipalities and local communities, who fear the consequences of lost tax revenue.
According to Ohio Department of Taxation data, the estate tax grossed $333.8 million in 2009, and $317 million in 2008. Of those funds, 20 percent went to the state, and the remaining 80 percent was the local share.
OFBF said it recognizes that about 2 percent of the state’s local governments will be challenged by loss of revenue and said it is encouraging its members to “work closely with local officials to identify spending reforms and offer support to those officials when difficult choices must be made.”
Other farm organizations also applaud the repeal. The Ohio Soybean Association, in a statement, said Ohio farmers have been unduly burdened by the estate tax and many residents “have lost significant portions of their family farm due to the burden of the tax and the inability to liquidate the means needed to pay for the farm after the loss of a loved one.”
Bret Davis, Ohio Soybean Association vice president, said its an issue of the next generation, and the one after. Davis is a fourth generation family farmer from Delaware County, and testified on behalf of OSA in support of the repeal.
“Farmers have a deep understanding of the stewardship that is bestowed upon them by their profession,” he said. “We recognize we are not ‘owners’ of the land, but we are stewards of the land passing the resource to generation after generation… For Ohio’s 26,000 soybean farmers, repealing the estate tax is about sustaining the family farm and passing the opportunity of a special way of life to the next generation.”