Tax and Finance Management

Study: Federal Tax Hikes Could Cost 1 Million U.S. Jobs

The Biden administration’s proposed tax increases — offered as part of the president’s infrastructure plan — could lead to a million fewer jobs in the first two years, according to a new study conducted for the National Association of Manufacturers (NAM). According to the study, the effects of increasing the corporate tax rate to 28%, increasing the top marginal tax rate, repealing the 20% pass-through deduction, eliminating certain expensing provisions, and other efforts to repeal federal tax reform would have large negative effects for the economy, including driving down U.S. GDP by $117 billion by 2023.

Last week, NAM President and CEO Jay Timmons issued a statement warning that “raising taxes on manufacturers would fundamentally undermine our ability to lead this recovery.” Timmons said manufacturers fought for decades to achieve a tax system that includes competitive rates and modern international tax provisions — and that as a result of the 2017 reforms, manufacturers raised wages and benefits, created more jobs, and invested in communities.

The NAM has created this action tool and talking points so OMA members can contact members of Congress to share the findings of the study. 4/8/2021

Sherrod Brown Seeks Overhaul of 2017 Tax Provisions

Ohio’s U.S. Sen. Sherrod Brown is part of a Democratic effort to overhaul aspects of the 2017 tax reform package. Under a proposal from the Cleveland Democrat, as well as U.S. Sens. Ron Wyden (D-Ore.) and Mark Warner (D-Va.), three taxes created in the 2017 Tax Cuts and Jobs Act – the Global Intangible Low-Taxed Income (GILTI), the Foreign Derived Intangible Income (FDII), and the Base Erosion and Anti-Abuse Tax (BEAT) – would be significantly altered.

In its analysis, the non-partisan Tax Foundation writes: “Before making significant changes, lawmakers should consider how disrupting the balanced incentives for the location of intellectual property could impact where U.S. companies not only locate their intellectual property, but also the R&D and other related activities.” 4/8/2021

Ohio Tax Receipts Outperforming FY21 Estimates by 4.3%

With just three months remaining in the current fiscal year, Ohio’s revenue collections continue to outperform expectations. In its preliminary revenue report for March, the Office of Budget and Management reported that March tax collections exceeded estimates by $41.4 million (2.6%). The Commercial Activity Tax was $11.1 million (118%) above the March estimate.

For the fiscal year so far, tax receipts have beaten the forecast by $763.4 million (4.3%). Compared to this point in FY20, tax collections are up $1.57 billion (9.3%). 4/7/2021

Tapping Potential Liquidity During COVID-19

COVID-19 has served as another reminder that “cash is king” in the business world. Many companies may still have untapped liquidity generation opportunities. OMA Connections Partner Plante Moran has published this insight into tapping that potential liquidity via the cash conversion cycle. 4/8/2021

New Guidance on COVID-19 Employee Retention Credit

Last week, the IRS issued new guidance for employers that claim the Employee Retention Credit for the first two calendar quarters of 2021. The new guidance explains recent changes, including the recently approved increase in the maximum credit amount. 4/5/2021

At a Glance: State Debt Compared to Assets

The federal debt has ballooned to more than $28 trillion. But many state governments also have a serious debt problem, as shown by this new infographic published by HowMuch.net.

More than a dozen states — excluding Ohio — have debt loads exceeding 100% or more of state assets, with a concentration of heavily indebted states in the Northeast. The most leveraged state is Illinois, where $248.7 billion of debt equals 468.7% of assets. 4/7/2021

Governor Signs Tax Law Changes

Senate Bill 18 has now become law. With the governor’s signature this week, Ohio’s tax laws will now be brought in line with federal changes to the Internal Revenue Code.

The bill also includes important provisions related to the commercial activity tax (CAT). These provisions ensure that both second draw Paycheck Protection Program loans that are forgiven and Bureau of Workers’ Compensation dividends paid to employers in 2020 and 2021 are not subject to the CAT. Since the measure included an emergency clause, these changes are effective immediately, in time for the new May 17 tax deadline. 4/1/2021

PPP Application Deadline Extended to May 31

President Biden has signed the PPP Extension Act of 2021 extending the Paycheck Protection Program (PPP) application filing deadline from March 31, 2021, to May 31, 2021, thus providing potential PPP borrowers additional time to submit their applications. The law doesn’t provide the PPP with any additional funding. However, $7.25 billion in additional funding was recently provided in the American Rescue Plan Act.

Read more from OMA Connections Partner Clark, Schaefer, Hackett. 4/1/2021

Tax Change Bill Heads To Governor

This week, the General Assembly passed Senate Bill 18, a bill to incorporate Internal Revenue Code changes into Ohio’s tax laws. Most importantly, the bill includes a provision to ensure that BWC dividends paid to employers in 2020 and 2021 are not considered gross receipts for purposes of the Commercial Activity Tax. The bill now heads to the governor’s desk for his consideration. 3/25/2021

Ohio Tax Deadline Extended to May 17

This week, Tax Commissioner Jeff McClain announced that Ohio will follow the federal government and IRS in extending the deadline to file and pay Ohio individual income and school district income taxes for tax year 2020. The new deadline is May 17. 3/25/2021