March 6, 2013
DBA Press Release: Sales Tax Opposition Statement
FOR IMMEDIATE RELEASE
March 6, 2013
Local Contact:William B. Wheeler, Executive Director
Dayton Bar Association
(937) 222-7902, bwheeler@daybar.org
The Dayton Bar Association strongly opposes Governor Kasich’s proposed 5% sales tax on legal services as set forth in his budget proposal for fiscal year 2014-2015.
Although we have many concerns with the proposed tax, as it will be imposed upon the consumer/client or a business entity, our primary concerns focus on two topics: (1) impeding access to justice, and (2) the economic impact to the State of Ohio.
Access to Justice:
The system of justice we enjoy as U.S. citizens is second to none. However, it is very complex, and specialized knowledge and training is necessary in handling court and certain transactional matters. Most people do not voluntarily seek the services of an attorney. Rather, they hire lawyers because some significant misery has occurred. These are people facing the loss of their home through a foreclosure, eviction, bankruptcy, divorce, child custody issues, personal injuries, criminal charges and estate processing needs following the death of a loved one. Some of these people have been sued and have no choice but to hire a lawyer to defend the accusations made by others. Access to justice is a fundamental right and the use of a legal professional to exercise that right is essential in stopping foreclosures, keeping the falsely accused out of prison, gaining child custody, concluding estates, securing benefits for veterans, obtaining a divorce for abused spouses and many other life-altering essential services provided by Ohio attorneys. A 5% tax on legal services will cause even more Ohioans, particularly the most economically vulnerable, to forgo their legal rights and not retain the services of an attorney to assist them in these matters. The United States and Ohio Constitutionsprovide citizens with the right to representation, an additional 5% to the cost of legal services for those already unable to afford representation, creates a barrier to the constitutional right of Ohio citizens.
Impact on Business
Many businesses hire lawyers to provide business support services such as patent or copyright work, corporate filings and formations, asset purchase agreements, security transactions, and other important business transactions. Many of these tasks are not required to take place in the same state where the business is located. Business owners can easily contract for legal services in any one of the 46 other states which do not impose the sales tax on legal services. At a time when Ohio greatly needs business development, this tax would competitively disadvantage Ohio businesses and attorneys much like other taxes have caused US companies to go elsewhere to save money. Simply put, the imposition of a new tax will not grow business and significant economic damage will result from clients moving their legal business out of Ohio to other states to save costs.
Economic Impact-Local Example
Because of the current favorable cost of doing business in Ohio, the Dayton area was chosen by an international law firm, WilmerHale, to become the site a Business Services Division in 2010. Now employing 72 attorneys and a total workforce of more than 250, this local example of high-value employment would be at risk. The proposed tax jeopardizes this type of business and economic development in Dayton and throughout the state of Ohio.
In Summary
Placing a sales tax on legal services burdens Ohio citizens facing involuntary legal hardships, limiting their access to justice, and would have a negative economic impact for Ohio. The Dayton Bar Association strongly opposes this proposed tax plan.
About the Dayton Bar Association
Founded in 1883, the Dayton Bar Association has been at the center of the legal community for 130 years. With a membership of more than 1600 legal professionals it is dedicated to the administration of justice and the public's respect for the law. Together, Judge, Magistrate, Attorney, Paralegal, Legal Administrator and Law Student members strive to Raise the Bar of the legal profession and serve the community in which they live and work.
