Veteran journalist Carl Hoffman believes he’s solved one of the great mysteries of the 20th century. In 1961 at the age of 23, Michael Rockefeller – son of New York Governor Nelson Rockefeller and a member of one of the richest and most powerful families in America ¬– travelled to remote New Guinea in search of primitive art for his father’s new museum.
Just Who Pays Ohio’s Estate Tax?
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If you plan to leave a lot to your heirs, you may not have to migrate south to avoid Ohio’s estate tax. Some legislators have discussed its repeal. WOSU explains how the estate tax works and who it affects.
Just about everything of value you own from your house to your 401K to your Grandma Estelle’s china cabinet is part of your taxable estate when you pass on.
Those are all added into your estate’s worth and if it totals more than $338,333, well, you have to give at least 6 percent to the state. Well not you, but you know.
Some legislators say abolishing the estate tax will help the middle class. But Columbus Attorney Brewster Randall said that depends on how you define the middle class.
“If you own a house and you get it paid off in full by the time you and your wife die, and you have several hundred thousand dollars in savings at the time of your death, then I assume it is hitting the middle class in that instance,” Randall said.
Supporters of the repeal say eliminating Ohio’s estate tax will help small business owners. Randall said yes, that is the case, if the business is large enough.
The other argument for repeal is to keep older, wealthy people from moving to say Florida which does not tax estates.
Randall noted this is why most Southern states do not have an estate tax.
“To attract wealthy people that would come down and spend their money in Florida and generate revenue,” Randall said.
But keeping the retired from moving to Florida, remember there’s sunshine down there year round, may take more than getting rid of the estate tax. Randall suspects the estate tax is not the driving force behind the southern migration.
“I’ve seen a lot of our wealthier clients who have a Florida residence still maintain their Ohio residency. People leaving in droves, our firm personally hasn’t seen it that much,” Randall said.
The estate tax does not generate very much revenue for the state, as most of the money goes to local municipalities. The Ohio Taxation Department indicates last year cities received $231 million from the estate tax.
And Randall said you don’t have to move out of state to escape the estate tax.
“Life insurance is one of the main asset categories that is not included for Ohio estate tax purposes,” Randall said.
Randall said with quote, “proper estate planning,” clients with a lot of assets, can take out a life insurance policy large enough to cover the amount of the estate tax.
It’s still to be seen who would be helped the most the middle class, small businesses but if the tax is eliminated there’s one group that could be hurt: estate planning attorneys.