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Opponents of Ohio's estate tax say it hurts the state by driving away wealthy residents.
State Rep. Jay Hottinger, a leader of the drive to repeal the tax in the General Assembly, said a "shockingly high number" of Ohioans leave because of the tax. But, the Newark Republican acknowledged on the "Sound of Ideas" on WCPN 90.3 FM there is no actual number to cite.
"When an individual decides to leave my home community in Licking County, believe it or not, they don't take out a press release," he said. "They don't send it to the news media and say, 'We're leaving the state of Ohio because we want to preserve our assets for our heirs."
He pointed to individuals instead, naming the founder of Wendy's restaurants as one example.
"Dave Thomas left the state literally on his deathbed to avoid the estate tax," Hottinger said.
PolitiFact Ohio was stirred. We imagined a dramatic dash for the border in a souped-up medical van.
Wanting to know more, we called Hottinger's office for details. When they didn't get back to us, we searched on our own.
We found a less dramatic story.
Thomas died in 2002, after a decade-long battle with liver cancer, at his home in Fort Lauderdale, Fla. He had lived there since 1982, when he moved to Florida after retiring as CEO of Wendy’s at age 49. Prior to that, he had lived in Ohio for 20 years.
If his primary goal at that time of his move was to limit the tax exposure his estate would have after his death, he must have been pleasantly surprised to discover that he also gained the year-round ability to play golf (which he loved) and to cruise on his 90-foot yacht, the I. Lorraine (named for his wife), which he was able to dock behind his home.
A generous philanthropist, particularly in the interests of children's welfare, medicine and education, Thomas supported (and established) a number of organizations and causes in Florida, as he continued to do in Ohio and elsewhere.
He said his greatest regret was not finishing high school, and in 1993 he hired a tutor and passed the G.E.D. exam. Coconut Creek High School in Fort Lauderdale made him part of its senior class, and awarded his high school diploma. He and his wife were king and queen of the senior prom, and Thomas was voted "Most Likely to Succeed."
Legal residency is not something that can be established by deathbed conversion. Nor is it determined solely by physical presence.
The point is that Thomas, an adoptee who was born in New Jersey and moved constantly as a boy, spending significant periods in Michigan, Tennessee and Indiana, was no mere Florida visitor or latecomer. Though he still had Ohio homes at Buckeye Lake and in the Columbus suburb of Upper Arlington, he registered to vote in Florida, not as an absentee in Ohio, in 1988.
There’s also evidence that Thomas (who was survived by his wife, five children and 16 grandchildren) knew a thing or two about taxes, making us doubt that he would have left tax and estate planning to the eleventh hour.
Gov. Bob Taft credited his support for getting passage of a $500 adoption credit on Ohio income taxes in 1999, and President Clinton gave him credit in 1996 for a federal law giving parents a one-time tax credit of $5,000 when they adopt a child.
There are other reasons to be skeptical of the claim about Thomas.
In examining claims about estate taxes elsewhere, PolitiFact Rhode Island found research reporting that estate taxes have little or no impact on the flow of people from one state to another.
The National Tax Journal in 2006 published "State ‘Death’ Taxes and Elderly Migration -- The Chicken or the Egg?," whose authors found no evidence that the elderly were responding to changes in estate taxes. Kail Padquitt, staff economist for The Tax Foundation, a think tank that studies federal and state tax policies, told PolitiFact he hasn’t seen any proof that the prospect of paying estate taxes drives people to move.
And if all this wasn’t enough, there’s another key fact to consider.
Hottinger’s claim was that Thomas fled the state "literally on his death bed, to avoid estate tax." That clearly isn’t the case, unless he lingered 20 years before passing. And at that, it would have been three years too soon.
Until 2005 (three years after Thomas’ death), Florida also had an estate tax.
Hottinger’s statement isn’t just inaccurate, it’s also ridiculous. On the Truth-O-Meter, it’s worthy of flame broiling. That’s why we rate it Pants On Fire.
WCPN 90.3FM, "The Sound of Ideas," Feb. 9, 2011
Ohio Department of Taxation, "A Brief Summary of Major State & Local Taxes in Ohio," 2010
Wendy's International, Dave Thomas Biography
New York Times, "Dave Thomas, 69, Wendy's Founder, Dies," Jan. 9, 2002
The Independent, "Dave Thomas," Jan. 10, 2002
The Plain Dealer, "Wendy's founder Dave Thomas dies," Jan. 9, 2002
Fort Lauderdale Sun-Sentinel, via The Plain Dealer, "The thrill of the grill," Jan. 26, 1992
Associated Press, "Wendy's rebound linked to founder's image," May 18, 1991
Columbus Dispatch, "A great, big lovable man," Jan. 9, 2002
Lexis-Nexis database search, Dave Thomas
Ohio Department of Taxation, "Personal Income Tax: Residency Guidelines," July 2008
Jones Day Publications, "Ohio's New Residency Requirements for Individual Income Tax Purposes," January 2008
PolitiFact Rhode Island, "Ocean State Policy Research Institute says Rhode Island's estate tax is the most significant reason people leave the state," Feb. 13, 2011
Florida Department of Revenue, "Florida's Estate Tax," 2010
Florida Estate and Tax Blog, "Florida Estate Taxes," Oct. 5, 2010
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