Ohio’s ultrawealthy population grew again this year and it expanded at a faster rate than most U.S. states, according to a report by Wealth-X, a wealth research firm.

Ohio now has more “Ultra High Net Worth” individuals — or really rich people — than all but seven other states. Overall, Ohio ranks seventh in population.

Wealth advisers attribute the growth to more business sales, the surging stock market and other improving economic conditions.

But Ohio still has fewer ultrawealthy individuals per capita than almost two-thirds of states, and there is a right-left political argument about whether the state should adopt business-friendly tax reforms to better attract and retain ultrawealthy people.

Wealth advisers say efforts should be made to nurture this group because they start new companies, create jobs, give to charities, pay taxes and make investments that foster innovation.

Some policy researchers, however, say the state benefits more by improving the lot for those at lower ends of the economic scale.

Median wages are stagnant, unemployment remains extremely high and job quality has declined for typical workers, said Amy Hanauer, founding executive director of Policy Matters Ohio, a liberal-leaning research group.

Ohio leapfrogs Connecticut

Ohio this year had 1,455 residents designated as Ultra High Net Worth, or people with $30 million or more in net assets, according to Wealth-X’s World Ultra Wealth Report 2013.

The state’s superwealthy population grew 9 percent this year after growing by just 2 percent in 2012. Ohio’s ultrawealthy population this year grew faster than all but 15 other states.

Ohio this year leapfrogged Connecticut, putting it behind California, New York, Texas, Florida, Illinois, Michigan and Pennsylvania.

Despite the growth, Ohio still has a below-average share of ultrawealthy residents relative to its population, ranking 33rd nationally. It has 1.3 ultrawealthy individuals per 10,000 residents, Wealth X said.

The state’s ultrawealthy population is growing because the economy and equity markets are improving and some successful business owners have decided to cash out, said Jeff Malbasa, chief operation officer with Spero-Smith Investment Advisers Inc., a Cleveland-based fee-only registered investment adviser.

“There has been more freeing up of financing to do deals, and the market values for those deals have improved to the place where if you are a business owner, you start thinking, ‘Alright, I will sell,’” he said.

Ultrawealthy Ohioans often are entrepreneurs who make crucial components for automobiles, appliances, aerospace technologies and other widely used products, Malbasa said.

“It’s the types of things you purchase that you never think about. …We make the bolt that goes into the dining tray in Delta Airlines,” he said. “It’s a family-owned business that started making bolts in 1918 that makes the best bolt available.”

Changing demographics

Private business ownership is the best path to wealth, and many family-owned businesses are thriving and their values are rising, because of the economy’s steady improvement, said Chuck Stutenroth, regional managing director for Ascent Private Capital Management of U.S. Bank in Cincinnati, which is a wealth advisory and consulting firm for clients with a net worth of $50 million or more.

Ohio’s demographics also are changing and many of business owners are aging and choosing to exit their companies or transfer ownership, he said.

“(Owners) are either passing it down to the next generation, or they are selling out to a competitor or, in recent years, private equity has made a big comeback in the region, and they are buying companies for premium dollars,” he said. “This creates a lot of liquidity — what we call money in motion.”

Some relatives of successful business owners become members of the Ultra High Net Worth group when they take over the family business or the companies are sold and they receive a chunk of the profits, advisers said.

The doubling of the stock market in the last five years also provided a big boost to many Ohioans with large equity portfolios.

The Nasdaq last week closed above 4,000 — a 13-year high — and up from 1,535 on Nov. 28, 2008. The Dow industrial and the S&P 500 were off from their record levels of last month, but are still well above where they were a year ago.

“Ohio’s growth was thanks to (a strong increase in equity markets) alongside a stronger than average growth in its real (gross domestic product), which also helped boost its GDP per capita,” said Fauzi Ahmad, director of media relations with Wealth-X.

Jobs and taxes

Spero-Smith’s Malbasa said Ohio has recently taken steps to level the playing with other states, including repealing its estate tax, but he argues that individual tax rates are still too high, and that means ultrawealthy individuals are lured into migrating to states with no income taxes, such as Florida and Texas.

“You are going to save 5 percent a year,” he said. “That’s a major attractor of the Ultra High Net Worth.”

But Hanauer said lawmakers are too focused on catering to the very tiny population of superwealthy people.

Instead, she said, the focus should be on addressing economic inequality and creating good jobs for the vast majority of Ohioans so wages will rise, the middle class will grow and there will be less poverty.

“Ohio has cut taxes for this population year after year after year,” she said. “We got rid of the estate tax, we slashed top rates on the income tax, and the federal government has slashed income taxes as well.”

According to the Economic Policy Institute, the top 1 percent of earners take home 20 percent of America’s income, and the total share of income claimed by the the bottom 99 percent has steadily decreased since 1979.