An initiative to repeal Ohio’s estate tax could mean a significant drop in revenue for the city of Beachwood.
Ohio House Bill 3, proposed Jan. 11 by Reps. Cheryl Grossman, R-Grove City, and Jay Hottinger, R-Newark, and now under review by the House Ways and Means Committee, proposes that estate taxes be eliminated. Proponents of the bill argue the tax drives businesses and retired Ohioans to states with no estate tax and are pushing for the bill to be passed before the finalization of the state budget, which has an April 15 deadline.
As the law stands, Ohio taxes estates worth more than about $338,000.
Estate tax revenue in Beachwood varies each year, but averages around $2.5 million annually. Beachwood’s estate tax revenue was $1.8 million in 2010 and $3.3 million in 2009, said city finance director David Pfaff.
However, with new business developments in the city, including the Eaton headquarters moving to Beachwood, city officials have projected an increase in income tax revenue of $5 million to $6 million in the coming years.
Still, said Pfaff, “That’s $2 million that has to come from somewhere else.”
Beachwood ranks in the top five cities in Cuyahoga County for estate tax collections, added Pfaff.
According to documents from the Cuyahoga County Auditor’s website, the county is projected to collect more than $1.1 million in estate taxes from Beachwood for the first half of 2011, the third-highest behind Shaker Heights and Gates Mills, respectively.
These collections are split between the county and the city.
In 2009, Beachwood estate tax revenue totaled nearly 7 percent of its total tax revenue and 10 percent in 2010.