Fiscal Note & Local Impact Statement
127 th General Assembly of Ohio
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BILL: |
DATE: |
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STATUS: |
SPONSOR: |
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LOCAL IMPACT
STATEMENT REQUIRED: |
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STATE FUND |
FY 2007 |
FY 2008 |
FUTURE YEARS |
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General Revenue Fund |
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Revenues |
Indeterminate loss |
Indeterminate loss |
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Expenditures |
- 0 - |
- 0 - |
- 0 - |
Note: The state
fiscal year is July 1 through June 30.
For example, FY 2007 is July 1, 2006 – June 30, 2007.
· The bill increases the state estate tax credit and exemption threshold. Any increase in the value of the estate tax credit and threshold may exempt several estates and reduce the tax liabilities of estates that are not exempt, thus resulting in an estate tax revenue loss.
· The bill changes the distribution of estate tax revenue. For estates with dates of death on or after July 1, 2007, state GRF will not receive any revenue.
·
The
bill authorizes townships and municipal corporations to exempt from the estate
tax any estate property located in the township or municipality. If local subdivisions exempt estate
property, estate tax revenues will be reduced.
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LOCAL
GOVERNMENT |
FY 2007 |
FY 2008 |
FUTURE YEARS |
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Townships and Municipal
Corporations |
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Revenues |
- 0 - |
Indeterminate gain or loss |
Indeterminate gain or loss |
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Expenditures |
- 0 - |
- 0 - |
- 0 - |
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Note: For most local governments, the fiscal year is the calendar year. The school district fiscal year is July 1 through June 30.
·
The
bill adjusts the state estate tax credit and exemption threshold. Any increase in the value of the estate tax
credit and threshold may exempt several estates and reduce the tax liabilities
of estates that are not exempt from the tax, thus resulting in an estate tax
revenue loss.
·
The
bill changes the distribution of estate tax revenue. For estates with dates of death on or after July 1, 2007,
townships and municipal corporations would receive 100% of any revenue from the
estate tax, less any deduction for the cost of administering the tax.
·
The
bill authorizes townships and municipal corporations to exempt from the estate
tax any estate property located in the township or municipality. If local subdivisions exempt estate
property, estate tax revenue will be reduced.
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The bill proposes to adjust
the state estate tax credit and exemption threshold, change the distribution of
estate tax revenue, and authorize townships and municipal corporations to
exempt from the estate tax any estate property located in the township or
municipality. The bill would affect the
state General Revenue Fund (GRF), townships, and municipal corporations. However, the magnitude of the fiscal impact
would depend on how townships and municipalities act in response to the bill.
Currently, resident estates
with dates of death on or after January 1, 2002 and gross values less than or
equal to $338,333 owe no state estate tax and are not required to file an
estate tax return. Every estate that
does file a return is allowed a nonrefundable tax credit of $13,900. The bill increases the existing
nonrefundable estate tax credit to $15,575 and the filing threshold to $366,250
for estates with dates of death on or after July 1, 2007. In December of every year, beginning in
2008, the Tax Commissioner is required to adjust the tax credit and exemption
threshold based on the consumer price index.
Any increase in the value of the estate tax threshold will exempt
estates from the tax, thus resulting in an estate tax revenue loss. Any increase in the value of the estate tax
credit will reduce the tax liabilities of estates not exempt from the tax.
Currently, the distribution
of estate tax revenues for dates of death after January 1, 2002 is 20% to the
GRF and 80% to the township or municipality of estate origin. Beginning with dates of death on or after
July 1, 2007, the bill allows a municipal corporation or township of origin,
except any township or municipal corporation that adopted a resolution or
ordinance to exempt estate property from the estate tax, to keep all of the
estate tax revenue less any deduction for the cost of administering the
tax. The state GRF would no longer
receive any revenue from estate tax.
The bill allows townships
and municipal corporations to exempt estate property from the estate tax. Any township or municipal corporation that
exempts estate property will not receive any estate tax revenue, unless they
overturn the exemption in the future.
An estimate of the fiscal impact to each township or municipality that
exempts estate property cannot be determined.
In FY 2006, total estate tax
collections were $270.5 million. The
GRF received $54.1 million while the remaining $216.4 million was
distributed to the townships and municipalities of estates' origin. Any revenue loss from the bill would depend
on several factors such as the number of townships or municipal corporations
that exercise the local option estate tax exemption, the effective dates of the
exemptions, and the gross value of estates in each township or municipal
corporation in a particular year.
If all townships and
municipal corporations were to exempt their estate property from the estate
tax, then the estate tax would yield no revenue. For estates with dates of death on or after July 1, 2007, the GRF
will receive no revenue, and any revenue loss will fall completely on the townships
or municipal corporations that choose to exempt estate property.
If all townships or
municipal corporations choose not to exempt estate property, for estates with
dates of death on or after July 1, 2007, they will keep all of estate tax
revenue collections (including the 20% revenue distributions that were
previously distributed to the state GRF).
It is possible that a township or municipal corporation may experience
an increase in its revenue from the estate tax.
LSC fiscal staff: Ruhaiza Ridzwan, Economist