On a 9-8 vote, the House Ways and Means Committee Wednesday night reported out HB3 (Grossman-Hottinger), legislation to repeal the estate tax beginning Jan. 1, 2013 — to get through this current biennium
Rep. Ron Amstutz (R-Wooster), chair of the House Finance and Appropriations Committee, said that although he supports the repeal he would pass on voting for the legislation until it is done in a fiscally responsible manner to address current budget issues with regards to local government concerns that were brought up in committee.
“Given my view that the bill is to repeal a tax that is about outright theft,” Amstutz said. He said local governments first need to be considered in the state budget plan before he will vote to repeal the estate tax.
The Ohio Municipal League, Ohio Township Association and several mayors from cities across Ohio said without the estate tax or another form of “replacement funding,” local governments would not have the necessary funds to maintain infrastructure and leverage federal and state dollars that they have relied upon for more than 25 years.
Susan Cave, executive director of the Ohio Municipal League said in her testimony that the league has never been for or against the estate tax as a state levy. Nor do they argue whether it is a good or bad tax. Cave and Heidi Fought, director of governmental affairs for the Ohio Township Association said any changes to the state tax policy must be done with full consideration of the impact to all local governments and as a precedent in Ohio there has been replacement revenue for local governments when local revenues are eliminated by state action.
Cave gave the example of the property tax roll back, homestead exemption and tangible personal property tax repeals. Additionally Fought said it is increasingly more difficult to pass property tax increases.
“We ask that as this issue works its way through the Legislature there will be a willingness to explore options other than flat out repeal of the state’s estate tax. Perhaps phasing the repeal with some type of revenue replacement, or change to the exemption amounts or percentages, or providing a local option; and I am sure there are others,” Cave said.
Supporters of HB3, including the Ohio Farm Bureau Federation and the Ohio Christian Alliance, said repeal of the estate tax would benefit family farms and small businesses in the state, would help preserve a family business and income to families already feeling a loss.
Greater Ohio weighed in as an interested party on the bill to illustrate some facts and perspectives on the impact to local governments trying to grow jobs through cutbacks in safety, planning, economic development and infrastructure.
“Estate taxes can precipitate the sale and further consolidation of farmland from family structured holding to larger corporate entities, sold off to developers or broken up into five acre lots,” said Gene Krebs, senior director of government affairs and policy. “Following the death, the estate tax can lead to a ‘fire sale’ of road frontage and woodlots as the heirs scramble to pay taxes. Since farmland preservation is one of the tenets of smart growth Greater Ohio is following this issue closely.”
Krebs suggested instead to reduce the estate tax take by half for local governments, put one fourth into a revolving loan fund for economic development projects that are locally determined and the terms of the loan set locally in a regional frame, and have the remaining fourth placed into a mutual fund pool where the locals determine the formula for aiding communities who are lower wealth, and once again in a regional frame. Phase it out over eight years.
Before taking a vote on the legislation, Reps. Tom Letson (D-Warren) and Mike Foley (D-Cleveland) introduced amendments that would accommodate the exemption of family farms from estate tax and would strengthen the estate tax by adding a millionaire’s bracket going forward from 2011, respectively. Both amendments were rejected along party lines – 12-5.
Earlier in the day, supporters of repealing the estate tax rallied with the bill’s sponsors on the Statehouse lawn Wednesday.
Rep. Cheryl Grossman (R-Grove City), one of the primary sponsors of HB3, told the crowd that this is the best opportunity they have ever seen to pass the repeal, and she is not sure the opportunity will come again.
Rep. Jay Hottinger (R-Newark), the other primary sponsor, said the estate tax “is a direct tax on Ohio’s middle class.” He said it is a matter of fairness and that by repealing the tax, farmers and small business owners will no longer have to sell in order to pay it.
The rally was attended by representatives of the Ohio Farm Bureau Federation and Citizens United to End Ohio’s Estate Tax.
Rep. Bob Peterson (R-Sabina), a former Ohio Farm Bureau president, told the crowd, “You and I know the challenge of passing on a farm or small business to the next generation.” He encouraged farmers to meet with legislators and “tell the story.”