COLUMBUS — Even as Gov. John Kasich seeks to greatly expand the state sales tax base, some lawmakers want to restore an exemption for rare coins that once was considered politically toxic.
Six of seven state representatives who’ve signed onto House Bill 26 weren’t in the General Assembly in 2005 when scandal rocked the Statehouse amid revelations that GOP fund-raiser and Toledo-area coin dealer Tom Noe had stolen from a $50 million rare-coin investment fund he operated for the Bureau of Workers’ Compensation.
In the wake of Coingate, lawmakers repealed a sales tax exemption for investment coins and precious metal bullion, an exemption valued at $7 million at the time.
Noe had successfully lobbied for creation of the exemption in 1989.
Lawmakers also prohibited the BWC from investing in such things as coins, antiques, artwork, collectibles, and racehorses.
Noe went to prison. Gov. Bob Taft became the first sitting governor convicted of a crime as he pleaded no contest to misdemeanor ethics charges for failing to disclose gifts he received, including Noe-connected golf outings. In 2006, Republicans were swept out of every statewide executive office save one.
“Ohio’s been there, done that,” state Rep. Teresa Fedor (D., Toledo) said. “It’s incredible this is being resurrected on top of the fact that there’s an unfinished taxpayer investigation. There are still unlimited questions that go along with this. I can’t help but think the Tom Noe incident was not just a conspiracy of one. The lessons must not matter,” she said.
Noe’s indictment followed a year-long investigation by The Blade that uncovered missing and stolen coins, massive mismanagement of the state’s invested funds, and a web of influence peddling that Noe created in state government and the local and state Republican parties.
House Bill 26 is sponsored by Rep. Ron Maag (R., Lebanon). Sen. Kris Jordan (R., Delaware) may introduce a similar measure in the upper chamber.
“We’re charging a tax on money,” Mr. Maag said. “It’s like you go to the bank with five $20 bills and you want a $100 bill, but they charge you $106. We’ve lost a lot of business. There used to be at least two national meetings, the American Numismatic Society and someone else, but they will not come to any state that has the tax.”
Brad Karoleff has four Coins Plus stores in the greater Cincinnati area that sell bullion, investment coins, and estate jewelry. He has sought for the exemption’s restoration.
“Tom Noe was crooked,” he said. “Does that mean the rest of the industry has to suffer because of one bad egg? I’m paying the price because Tom Noe couldn’t keep his finger out of the cookie jar. That’s not fair.”
Rep. Lynn Wachtmann (R., Napoleon) is the only northwest Ohio lawmaker to sign on to the bill and the only co-sponsor who was in the General Assembly at the time of Coingate. He voted against the 2005 budget that included the exemption’s repeal. “I looked at this as a bad tax,” he said. “I still think it’s a bad tax. I don’t have a problem with the politics of it. That’s old school from my perspective.”
Democrat Rep. Dale Mallory (D., Cincinnati) signed on to the bill, but his office said he’s having his name removed.
“We should be very cautious going forward,” said Rep. Chris Redfern (D., Catawba Island), who doubles as Ohio Democratic Party chairman. “Legislators must take into account what occurred and be very wary of making this policy change… It is clear how Tom Noe got access to the BWC resources. It was through exempting the sales tax on rare coins and collectibles.”
Mr. Kasich on Monday proposed a $63.3 billion, two-year budget that proposes expansion of the sales tax base to everything from legal services to funeral services, pet grooming to human grooming, and cable TV to Internet music downloads. The plan does not include a coin and bullion exemption.
“We do not take public positions on every bill introduced in the General Assembly,” Kasich spokesman Rob Nichols said. “It’s important to note that our budget removes many sales tax exemptions in order to broaden the base to provide tax cuts for individuals and virtually all small businesses.”
Contact Jim Provance at: email@example.com or 614-221-0496.