Tax and Finance Management

Study: Ohio’s Property Tax Burden on Businesses is Among Lowest in U.S.

An updated comparison by the Tax Foundation finds Ohio imposes the nation’s ninth smallest property tax burden on businesses. The think tank cites a study that says nationwide, taxes on real, personal, and utility property account for 38% of all taxes paid by businesses to state and local governments. See the foundation’s comparison map. 12/16/2019

Business Travelers: Take Note of Updates to Per Diem Rates

The federal Tax Cuts and Jobs Act (TCJA) changed the way some businesses must compute per diem allowances. The IRS recently issued guidance for business travelers and their employers to clarify the changes. OMA Connections Partner Clark Schaefer Hackett has provided a refresher on what changed under the TCJA and the rules for using per diem rates. 12/17/2019

OMA Bill to Abolish Tax on Temp Workers Introduced in Ohio Legislature

This week, an OMA-sponsored bill to eliminate the sales tax on temporary workers, while also eliminating the sales tax on industrial janitorial services purchased to clean machinery in a manufacturing facility, was introduced at the Statehouse.

Both provisions — longtime priorities of the OMA Tax Committee — are contained House Bill 440, bipartisan legislation offered by State Reps. Sara Carruthers (R-Hamilton) and Jessica Miranda (D-Forest Park). HB 440 was referred to the House Ways and Means Committee; hearings are expected to begin in early 2020.

Ohio remains one of a handful of states that taxes temporary workers, and is the only state that double taxes those workers on both the service fee and wages. Eliminating the sales tax on janitorial services would bring much-needed certainty for manufacturers and this type of service, which is often contested under the manufacturing sales and use tax exemption.

The OMA would like to hear from members who are willing to testify on the importance of this proposed tax change. Please contact Rob Brundrett if you or your company is interested in testifying or learning more about the bill. 12/12/2019

Ohio Tax Collections Outpacing Forecasts

Ohio’s tax revenues remain slightly ahead of expectations for the current fiscal year, which started July 1. November’s jump in sales taxes were offset by a decline in income taxes, according to the latest monthly report from the Office of Budget and Management. Auto sales taxes saw the largest proportional jump last month, beating projections by nearly 12% — a sign of economic health.

For the fiscal year-to-date, overall tax collections of $9.78 billion are $95 million, or 1%, ahead of official forecasts. The Commercial Activity Tax exceeds estimates by $23.9 million, or 3.1%, while income taxes are 1.1% under forecasts. 12/9/2019

Survey: Manufacturers Likely to Cut CapEx in 2020

It was reported this week that U.S. manufacturing executives plan to spend 2.1% less on capital expenditures in 2020, the first drop since 2009, according to a survey by the Institute for Supply Management. Nearly 40% of executives said the domestic economy was their main reason for cutting back, while just 3% cited tariffs as the cause.

The report indicates a turnaround may begin in the first half of 2020 and pick up later in the year. 12/10/2019

At a Glance: State Government Finances

While U.S. government debt recently surpassed $23 trillion, the financial health of the individual states varies considerably. HowMuch.net has published this infographic to provide a snapshot of the financial wellbeing of all 50 states, comparing their total expenditures to their total revenues.

Ohio is among the region’s leaders in this comparison, with a surplus of more than 12% and in better financial shape than any neighboring state.12/10/2019

Report: Ohio Lags in Transportation Spending

A new report from the National Association of State Budget Officers shows Ohio saw a 6.8% boost in transportation spending from FY 2018 to FY 2019. That’s considerably less than the average increase of 8.9% across all 50 states.

When considering all state and federal funds, as well as bonding, it is estimated that transportation accounted for 4.8% of Ohio’s overall expenditures in FY 2019. Only four other states (Colorado, Louisiana, Oregon and Wyoming) had smaller percentages dedicated to transportation.

Meanwhile, Medicaid was Ohio’s largest state expenditure, accounting for 38.0% of spent dollars (compared to 28.9% nationally), followed by 16.7% for primary and secondary education. 12/3/2019

Americans Spend $9.4B on Cyber Monday

Americans spent a record $9.4 billion on Cyber Monday — nearly 20% more than last year’s $7.9 billion. This will boost states’ online sales tax collections in the first full year since the U.S. Supreme Court’s South Dakota v. Wayfair Inc. decision. But according to The Pew Charitable Trusts, analysts say state coffers may not get a gigantic boost since many major online retailers had already been collecting and remitting sales taxes before the SCOTUS ruling. 12/4/2019

Impending Health Care Taxes Loom Over Manufacturers

As 2019 winds down, manufacturers are fighting against three major federal taxes on health care: the Health Insurance Tax (HIT), a multi-billion dollar tax imposed on health insurance premiums; the so-called Cadillac Tax, a 40% tax on more expensive health insurance plans; and the medical device tax, a tax on life-saving medical devices. See the report from Washington by the National Association of Manufacturers.11/25/2019

Ohio Sales Tax Collections Up, Income Tax Receipts Down

In its latest monthly report, the Ohio Office of Budget and Management says the state’s non-auto sales and use tax collections in October were roughly $43 million (5.7%) above estimates, while personal income tax receipts were more than $20 million (2.8%) below estimates. For the fiscal year to date, state tax revenues were $97 million (1.3%) above projections. 11/18/2019