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OHIO HOUSE SOFTENS STING OF ESTATE TAXES

House lawmakers yesterday decided to cut into the tax man's profit from death by passing a bill that would decrease the state's estate tax.

The bill, which the Senate is expected to send on to Governor Taft for his signature, exempts estates up to $200,000 from taxation in 2001 and up to $338,000 starting in 2002. Currently, estates above $25,000 are taxed at graduated rates.

Within two years, nearly 80 per cent of those who, under current law, would have to file and pay estate taxes will no longer be required to do so, said House Speaker Jo Ann Davidson (R., Reynoldsburg).

"I think that is really monumental movement," she said.

The legislation would permit, after this year, family members to deduct the value of family-owned businesses up to $675,000, including farms, when computing estate taxes.

"The beginning of the end of the estate tax will do absolutely more for farmland preservation than any other act that this legislature will take," said state Rep. Jim Buchy (R., Greenville).

"Today, we can sound the death knell for the death tax in Ohio," said state Rep. Donald Mottley (R., West Carrollton). "Almost every Ohioan, who is not indigent or hasn't passed everything to his spouse, is paying the Ohio estate tax today."

The legislature also decided to form a committee to recommend how to eliminate the estate tax entirely by 2006.

Two months ago, some Republican legislators began to push for an income- or property-tax cut even though Governor Taft wanted to wait until the state's Supreme Court ruled on the school-funding issue before deciding on what to do with the state's surplus.

Yesterday, House Republicans focused their election-year tax cut on the estate tax cut - a position supported by Governor Taft and Republican Senate leaders after the state Supreme Court's latest decision declaring the school-funding system unconstitutional. Except for a Lima-area lawmaker, conservative House Republicans did not attempt to upset a tax-cut deal negotiated by the governor and GOP leaders.

"It was a judgment call, not a principle," said state Rep. Jeff Jacobson (R., Dayton), a tax-cut agitator who was mostly quiet yesterday. Mr. Jacobson said a majority of the Republicans, who control the House, supports a temporary income-tax cut pegged to the size of this year's budget surplus. That amount won't be known until the state fiscal year ends June 30, but Ms. Davidson estimated the surplus at $400 million to $500 million.

The House rejected an amendment from state Rep. John Willamowski (R., Lima) to hold a three-day sales-tax exemption on clothing and shoes, up to $100 per item. Mr. Willamowski said a "sales-tax holiday" in August would help parents get their children ready for the school year.

Mr. Willamowski said a "sales-tax holiday" would have discouraged many Ohioans from shopping in border states such as Pennsylvania, which exempts clothing and shoes from sales tax.

But in a 74-22 vote, the House rejected Mr. Willamowski's amendment. Opponents said it would have started to chip away at state-sales tax revenue, which totals $6 billion a year.

Governor Taft was "very pleased" with the House's action because it will help the state respond to the Supreme Court's May 11 school-funding decision, said Scott Milburn, the governor's press secretary. The high court - for the second time in three years - said the school-funding system is unconstitutional, in large part because the system relies too heavily on local real-estate taxes.

"[Mr. Taft] asked the General Assembly to maintain maximum flexibility, and they were responsive to his request," Mr. Milburn said.

A House-Senate committee is expected to work this summer on responses to the court's decision. Mr. Milburn said "those ideas may cost money."

Republican lawmakers balked at Mr. Taft's request, but they also did not pursue a temporary or permanent property-tax or income-tax cut.

Also yesterday, the House voted 96-1 to pass a bill that backers said will help "level the playing field" between city-owned cable televisions systems and privately owned cable companies.

State Rep. Lynn Olman (R., Maumee) said the bill would not "mute competition," but it would require private and public cable systems to comply with the same franchise agreements, including the payment of franchise and permit fees and taxes.

The bill requires local governments that plan to build a cable system to give private companies 45 days notice.

All content © 2000 THE BLADE, TOLEDO, OHIO and may not be republished without permission.

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© Copyright 2008 State Representative Lynn Olman. All rights reserved.

 

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