Tax and Finance Management

Ohio’s April Tax Revenue Comes in Below Forecast

Ohio’s April tax receipts were below forecasts for the first time in several years. See the monthly financial report from the Office of Budget and Management.

As Gongwer News Service reports, last month’s receipts were still the second-highest April total on record, reflecting solid footing as the biennial budget plan (House Bill 33) moves closer to the finish line. 5/9/2023

U.S. Debt Nears $32 Trillion as Ceiling Talks Begin

As the federal debt nears $32 trillion, leaders in D.C. are discussing sticking points in negotiations to raise the nation’s debt ceiling.

U.S. Treasury Secretary Janet Yellen has said action must be taken by June 1 to avoid default. JPMorgan Chase CEO Jamie Dimon has warned that panic will overtake markets as a default becomes more likely.

This infographic shows the growth in federal debt since the Great Recession. (It was $10.6 trillion just 15 years ago.) The non-partisan Committee for a Responsible Federal Budget has published this graph showing more than $14 trillion in COVID-related spending, loans, grants, subsidies, and tax cuts since 2020. 5/9/2023

Economic Barometer: May 2023

• The producer price index, which measures prices for final demand goods and services, increased 2.3% from April 2022 to April 2023 — the lowest level of growth since January 2021.
• Core consumer inflation remains stubbornly high, due largely to shelter prices, according to the latest Consumer Price Index report.
• This infographic shows how quickly the federal funds rate has been raised during the past year.
• U.S. job openings fell in March to their lowest since April 2021, while layoffs rose to 1.8 million, their highest level since December 2020.
• CEOs remain largely pessimistic about what’s ahead for the economy, according to the latest Conference Board data.
• Experts with OMA Connections Partner RSM say the dispute over the federal debt ceiling is eroding consumer and corporate confidence, as evidenced by the increased demand for short-dated securities.

There’s still time to register for RSM’s May 16 economic outlook webcast. Register here. 5/11/2023

Ohio Gets Poor Grade for Individual Income Tax

As Ohio lawmakers consider proposed income tax relief, the Tax Foundation has updated its 50-state index for individual income tax structure. Ohio is ranked in the index’s bottom 10 states, coming in at No. 41.

The individual income tax is important to businesses since pass-through entities are taxed in this manner. States scoring well in the Foundation’s index typically have a flat, low-rate income tax with few deductions and exemptions. 5/3/2023

RSM: Banking Turmoil Will Affect Lending, Economy

The recent turmoil among regional banks will most likely show up in the U.S. economy during the next 60 to 90 days, according to OMA Connections Partner RSM. On its “Real Economy” blog, the firm writes: “As banks tighten lending standards and pull back on the provision of credit, growth in the economy will slow further.” 5/1/2023

OMA Supports Bill to Ease Local Tax Compliance

The OMA testified this week in support of House Bill 121, which would allow businesses employing remote workers to elect a streamlined method of apportioning their net-profits tax collected by municipalities. This would reduce employers’ administrative burdens and compliance costs. Income tax withholdings wouldn’t be affected. For more, see this bill summary.

Justin Cook, partner at Bricker Graydon LLP — the OMA’s general counsel — told lawmakers the bill “is a sensible step towards reducing administrative burdens on Ohio businesses.” Read Cook’s testimony. 4/25/2023

RSM: 75% Chance of Recession in Next 12 Months

OMA Connections Partner RSM forecasts a 75% chance of a recession over the next 12 months due to the likelihood of tighter lending standards. On its “Real Economy” blog, the firm notes that manufacturer sentiment “has resided in terrain consistent with a recession for the past four months.”

On May 16, RSM will host a complimentary webinar to examine the economic headwinds and outlook for middle market businesses. Register here. 4/26/2023

Pro-Manufacturing Tax Bill Introduced on Capitol Hill

On Capitol Hill, tax legislation has been introduced to end a harmful tax change that has made R&D more expensive in the U.S. The bill also addresses interest deductibility and full expensing.

The National Association of Manufacturers has endorsed the bipartisan American Investment in Manufacturing (AIM) Act, which would reinstate the Earnings Before Interest, Tax, Depreciation, and Amortization (EBITDA) measure. Learn more. 4/26/2023

Deducting the Costs of Seeking New Business

In its latest update, OMA Connections Partner Hall, Kistler & Company offers small-business insight on deducting costs involved in attracting new customers and retaining existing ones, including advertising and marketing. Such expenses must be ordinary (common in the industry) and necessary, as noted in the IRS’ guidance for business expense deductions. 4/25/2023

House Budget Would Provide Modest Income Tax Relief

As reported previously in this Leadership Briefing, House leaders this week unveiled their version of the operating budget (House Bill 33).

The initial House budget plan does not include a flat tax, despite being named a priority by House leaders earlier this year. The current draft of the House plan would eliminate an income tax bracket by collapsing the current 3.226% bracket into the 2.765% bracket — and then reducing the rate to 2.75% for earnings between $26,050 and $92,150.

Here are Ohio’s current income tax brackets. 4/19/2023