As many are aware, Ohio’s estate tax will cease to exist at the beginning of next year. This has seemingly caused some panic by some local government officials, as highlighted in a recent Canton Repository article.
Much of the alarm centers around a reduction in revenue for local governments. It seems every time tax cuts are proposed, many people—including those in the news media—immediately resort to thinking about how it will “hurt government,” as opposed to helping individuals and businesses.
People clamor to the idea that the elimination of the estate tax will automatically equate to less tax revenue for state and local coffers. But this argument ignores the potential loss in other tax revenue the estate tax causes by dissuading businesses from coming to Ohio in the first place.
It especially hurts family-owned businesses, such as farms, which could be forced to shut down due to not being able to pay the estate tax after the owner passes away. In the Canton Repository article, Jackson Township Fiscal Officer Randy Gonzales referred to the estate tax’s elimination as a “tax cut for the wealthiest 5 to 7 percent.” However, as the article then pointed out, all estates valued at more than $338,333 are currently subject to the tax, which implies that not just the “rich” are impacted by the tax.
The amount of estate tax revenue varies year to year, depending on the number of deaths. Therefore, local governments should never balance their budgets on money that is not guaranteed. It would be extremely difficult for local government to base their financial health on the number of deaths sustained in their borders each year.
The easy talking point is that now taxes must be raised to cover the loss of tax dollars. The choice does not always have to come down to raising taxes to “cover losses.” Local governments can examine their finances and cut costs in other areas, which according to the article is what has been done effectively in cities like Alliance.
Ohioans pay enough in taxes while they are living. They should not have to answer to the tax collector upon their deaths.