Wednesday, May 24, 2000
Ohio tax-cut bill moves forward
Property tax debate continues
By Spencer Hunt
Enquirer Columbus Bureau
COLUMBUS Ohio lawmakers advanced a bill Tuesday that would reduce estate taxes, while continuing a debate over property tax relief.
The House Finance Committee voted, 27-1, in favor of a bill that would eliminate all inheritance taxes on estates valued up to $200,000 next year, increasing to $338,000 in 2002.
The tax on a $300,000 estate would drop from $11,600 to about $7,420 under both the House and Senate versions. |
The Senate version would eliminate a maximum $1,550 tax on a $65,000 estate.
The House version would go on to eliminate up to $2,600 in taxes for a $200,000 estate.
Lawmakers estimate more than two-thirds of Ohioans settling the estate of a deceased relative won't have to pay any estate taxes next year if their bill becomes law. And in 2002 an estimated 78 percent of all estates would be exempt from any taxes, said bill sponsor Rep. J. Donald Mottley, R-West Carrollton City.
That would be a dramatic change, Mr. Mottley said Tuesday night. We're no longer talking about reducing the taxes; we're reducing the number of filers.
The bill would provide a 36 percent tax cut on estates valued from $200,000 to $675,000 in 2001, and from $338,000 to $675,000 in 2002. The tax on a $300,000 estate, for example, would drop from $11,600 to about $7,420 next year. In 2002, that estate would be tax-exempt.
Lawmakers also added a provision that would exempt family businesses and farms valued up to $675,000 from any estate taxes if qualified family members inherit them. Another amendment would let husbands or wives inherit their deceased spouses' tax-exempt retire ment accounts without paying any estate taxes on the transfer.
The proposal was pitched as an improvement to a bill the Senate passed last week, which would exempt estates valued up to $65,000 from taxes. Like the House plan, the Senate bill also offered a 36 percent cut on estates valued between $65,000 to $675,000.
More than 27,000 estates were settled in Ohio last year, sending $407 million to state and local governments. The House bill would cost the state an estimated $86 million next year and another $133 million a year starting in 2002.
For taxpayers, the plan would eliminate up to $2,600 in taxes for a $200,000 estate next year, and up to $13,880 in taxes for $338,000 estate in 2002.
While lawmakers were readying this plan to pass the House and Senate today, Re publican Gov. Bob Taft and legislative leaders were unable to compromise on other plans that would cut property taxes.
Despite that, conservative lawmakers planned to push party leaders late Tuesday night to pass a proposal cutting up to $200 million in local property taxes.
We've been talking all morning on the estate tax and trying to reach a compromise with the House, said Senate President Richard Finan, R-Evendale. I don't even know what the alternate proposals are, to tell you the truth, at this point in time.
The cut would appear as an increased discount on homeowners' property tax bills or as a one-time credit on next year's income tax returns.
An analysis of one proposed property tax cut plan showed the owner of a $100,000 Cincinnati home saving about $70 next year. The owner of a $200,000 home would save about $140.
The governor has said he would support a one-time, $100 million reduction in property taxes if lawmakers also set aside $100 million to improve school funding.
A recent Ohio Supreme Court ruling declared the state's school funding system inadequate and overreliant on property taxes.
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