Just as businesses compete with one another for customers, so does each state in the country compete against one another for residents. Where businesses look to cut costs, lower prices and improve services, states can cut taxes, lower the cost of living and improve public services.
This is the reason why lowering taxes oftentimes can generate more tax revenue -- when more people are attracted to a state and move there, more people are working and, thus, more people pay into the tax system.
Ohio took a major step toward improving its competitiveness among other states during the previous General Assembly. During the passage of the operating budget, the House, Senate and governor agreed to abolish the estate tax, or "death tax" as it is commonly called.
Ohio owned one of the most unfriendly estate taxes in the country. A person was exempt from paying taxes on only the first $338,333 on the estate, which was the lowest among all 50 states. In fact, it was roughly $1.7 million lower than the national average. Uncompetitive tax rates can be a major drag on the economy, as evidenced by the exodus of people leaving Ohio for places like Florida or Texas.
Not only do these states have warmer climates and more sunshine, but they also attracted outsiders based on their tax rates as well. In order for a state like Ohio to compete, eliminating a burdensome and ineffective cost on citizens such as the estate tax made a lot of sense.
The elimination officially took effect on January 1st of this year. I believe this will especially help family farms and small businesses, whose owners will no longer have to live with the prospect of an estate tax weighing down on them at the time of their death. That money can then be put to better use, such as expanding the workforce, investing in new equipment or providing better services.
Rep. Landis may be reached by calling 614-466-8035, e-mailing Rep98@ohiohouse.gov or writing to State Representative Al Landis, 77 S. High St., Columbus, OH 43215.