Opinion Editorial by Rep. Terry Nealey: Ensuring fair treatment under our state’s tax system
I remember several years ago, sitting at the breakfast table in my Dayton home, reading the newspaper and growing increasingly frustrated by the many stories from the state Capitol touting the incredible growth in programs funded through the state's general fund budget and the pressure to raise taxes to accommodate these new programs. That's one of the main reasons I first ran for state representative in 2009. I felt we needed to budget better by making government live within its means, creating a healthy “Rainy Day Fund,” and ensuring fairness in the tax system.
Today, I serve as the ranking Republican on the House Finance Committee, where I am working against unnecessary tax increases and preserving tax incentives/preferences for employers who create jobs to remain competitive.
I am also seeking to ensure citizens are treated fairly within the tax code. Here are two examples:
1. Five years ago, a bookkeeper was filling out a report for a local food processing firm receiving a tax preference. The report she filled out was a requirement from the state to continue this firm's eligibility for the lower tax rate. Unfortunately, she put a correct number on a wrong line of the form.
When the inadvertent error was discovered a few months ago by company officials, they notified the state Department of Revenue (DOR). DOR's response was to fine the company 100 percent of the tax preference they received, as required by state law. In this case, that fine was more than $660,000 — for a simple error that DOR never noticed until the company voluntarily notified the department.
In response, I have authored House Bill 2540, which would reduce that penalty to 35 percent of the tax preference claimed. People who do the right thing should not be thrown out of business because of a simple clerical error. The measure passed the House unanimously and awaits action in the Senate Ways and Means Committee.
2. A misinterpretation of the law by several county treasurers resulted in some surviving spouses who inherited property being charged a real estate excise tax (REET) on the real property. The REET is imposed on each sale and/or transfer of real property. Individuals who can show a will, community property agreement or court order, can be exempted from the tax. But not every surviving spouse has those documents, even though they have legally inherited the property — often where they have lived most of their married lives. So some county treasurers have been collecting the “widow tax” from them.
To clarify this law, I introduced House Bill 2539. The measure exempts the heir or heirs from the REET if they provide a copy of the death certificate along with a lack of probate affidavit affirming the legal inheritance of the property. The measure passed the House unanimously and is advancing in the Senate.
These are small, but important ways to ensure a more equitable tax system for our citizens in the 16th District and throughout the state.
I would like to also take this opportunity to recognize another person who has made a tremendous difference in the 16th District — Sen. Mike Hewitt. As you know, Sen. Hewitt recently announced his retirement from the Legislature at year's end. I have appreciated his leadership, mentorship and friendship within and outside of the Legislature. I hope you join me in wishing him well as he begins a new chapter in his life.
EDITOR'S NOTE: Rep. Terry Nealey, R-Dayton, serves the 16th Legislative District and is the ranking Republican on the House Finance Committee.
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