OHIO TAXES
MIDDLE CLASS AT DEATH
TO FUND RICHEST
TOWNS
OHIO ESTATE TAX REPORT, 2nd Edition
(Nov. 2006),
by James Brodbelt Harris, CFA
“Ohio’s
Estate Tax is an example not only of an unfair tax, but an extremely unfairly
distributed tax, shortchanging most towns and schools in rural and urban Ohio”
Zanesville,
OHIO (Nov. 2006) – Bexley native James Brodbelt Harris, CFA, and his firm Harris
Investment and Property have published online the Ohio Estate Tax Report, 2nd
Edition, which analyzes the statewide Ohio death tax and the very
regressive distribution of statewide tax revenues to the wealthiest towns in
the state. Although Harris calls himself a Reagan Republican and emphasizes the
low $338,333 exemption in Ohio and high 7% estate tax rate, his report
powerfully dissects the absurdly regressive distribution of estate taxes in
Ohio, collected statewide, but mostly transferred by state law to wealthy
villages and towns like Indian Hill, Shaker Heights, Rocky River, Upper
Arlington, Hunting Valley, and Chagrin Falls.
In
the May 2006 Republican congressional primary, Harris prominently challenged
the corrupt former Congressman Bob Ney in East Central Ohio’s 18th
district, attracting a third of the vote without actively raising a single campaign
dollar, and focusing his campaign mostly on corrupt special interest spending
and government obesity. A Chartered Financial Analyst and Ohio native, Harris emphasizes the precarious, relative
economic position Ohio encounters after a generation of liberal tax burdens
and crony special interest spending. The Ohio estate tax is but one of the weird
taxes which burden Ohio businesses and taxpayers, driving out its native
achievers, promoting capital flight, and poisoning the state for new
entrepreneurship.
For
the report, the author collected seven years of data from the Ohio Department
of Taxation (1998-2004), combining the data along with population statistics
from the U.S. census (2000) to analyze the amount of estate taxes
paid and the per capita distribution of estate tax receipts to municipalities
and townships. The report makes several key findings that upend conventional
expectations about the state’s death tax, especially about who pays the tax and
which towns get the bulk of the distributed estate tax receipts, in total and
on a per capita basis. Whereas most Ohioans believe the Ohio estate tax is a
progressive statewide tax paid only by the wealthy, the facts are that most
estate taxes are paid by middle class estates at a single rate of 7%, and that by
law, 80% of total Ohio estate tax receipts are distributed regressively, with
most of the proceeds going to the general revenue funds of the richest
municipalities and townships in the state. Ohio leads most other states in combined tax burdens, as
well as bankruptcies, foreclosures, population loss, capital flight, and low
economic growth. For a generation, Ohio’s high tax economy has failed, and the Harris report analyzes
one of the unfair statewide taxes in a Byzantine tax code that has contributed
to that failure.
FINDINGS
- Ohio exemption amount is only $338,333 (at 6%) and above
$500,000, the tax rate is 7%
- The Ohio estate tax is not a progressive tax since almost
all taxpayers pay 7%
- Marginal combined estate tax rate (Ohio and U.S.) is 53% on estates above $2,000,000
- Ohio’s share of total estate taxes is higher than
Federal share for most Ohio taxpayers
- Ohio estate tax exceeds the federal estate tax at
estates valued up to $2,294,102
- Even estates valued at $3,000,000 pay 29% of
combined taxes directly to Ohio
- Effective transfer tax rate is much higher on net
amount actually transferred after tax
- Most farms aren’t exempt from estate tax due to flawed
wording of farm provisions
- Veterans pay estate tax without exemption and
likewise, homes are non-exempt
- Almost all estate tax receipts are regressively
distributed, mostly to several rich towns
- Columbus, Cleveland, Dayton, Akron and Toledo and most rural areas are shortchanged
- Total of distributed estate tax receipts over 7
years was $1.69 billion, or $21 per capita/yr
- Richest 19 Cities received $127 per capita/yr but
poorest 221 cities received $18 per c/y
- Richest cities include: Indian Hill, Pepper Pike,
Beachwood, Oakwood, Shaker Heights
- Cincinnati received $59 per c/y but Dayton and Cleveland got $7 and $9 per c/y
- Richest 25 villages received $77 million, more
than Poorest 673 villages combined
- Richest 25 villages have just 48,078 residents (5%)
vs. 825,526 in poorest villages (95%)
- Richest 25 villages received $230 per c/y versus
$13 per c/y in 673 poorest villages
- Richest villages include: Hunting Valley, Kirtland Hills, Waite Hill, Hills & Dales, Chagrin Falls, Bratenahl, Jacksonburg, Gates Mills, Ottawa Hills
- Richest 25 townships received $131 per c/y vs. $15
per c/y in poorest 1284 townships
- Richest townships include Elizabeth, Beavercreek, Baughman, Chagrin Falls, Clinton
- Richest townships received 25% of tax
distribution to townships with 3.6% of population
- Richest city (Indian Hill in Hamilton Co.)
received $6,075 per capita per year over 7 yrs
- Richest village (Hunting Valley in Cuyahoga Co.) received $37,315 per capita over 7 yrs
- Richest township (Elizabeth in Miami Co.) received $22,907 per capita over 7
yrs
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