Mar 02, 2015
From KPMG TaxWatch
Details on proposed tax changes in three key states were recently released. In his 2015 State of the States address, Governor Kasich of Ohio proposed $500 million in tax cuts, including reducing individual income tax rates across the board by 15 percent in 2015 and another 8 percent in 2016. This would bring the highest individual income tax rate down from 5.33 percent to 4.1 percent over a two-year period. Another change would be to eliminate taxes on businesses and pass-through entities with gross receipts of $2 million or less. To fund these reductions, the Governor is proposing adoption of a severance tax on hydrocarbons, increasing the CAT rate, reducing the CAT on firms with receipts of $1 million to $2 million, and leaning more on consumption taxes, which most likely involves expanding the sales tax to certain services. The Governor’s budget documents had earlier identified certain services, including management consulting, public relations, and polling for taxation.
In Pennsylvania, Governor Tom Wolf recently released certain details on the tax reforms that will be included in his 2015-2016 budget. Although full details on the budget will not be disclosed until March 3, 2015, the tax changes he mentioned in a press release include reducing the corporate income tax rate from 9.99 percent to 4.99 percent over the next two years and eliminating the capital stock franchise tax entirely. The Governor is also proposing to close loopholes by adopting combined reporting.
In Texas, Lt. Governor Dan Patrick and the Chair of the Senate Finance Committee recently announced the introduction of three bills that would provide tax relief to Texas homeowners and businesses. Senate Bill 1 would increase the property tax homestead exemption from a flat $15,000 to 25 percent of the median home price in Texas each year. Senate Bill 7 would reduce franchise tax rates permanently from 1 percent to 0.85 percent for general taxpayers and from 0.5 percent to 0.425 percent for retailers and wholesalers. A third bill, Senate Bill 8, would increase the franchise tax exemption so that businesses with up to $4 million of total revenue would be exempt. Currently, businesses with $1 million or less of total revenue are exempt from the franchise tax. Please stay tuned to TWIST for further updates on these proposals.
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The following information is not intended to be "written advice concerning one or more federal tax matters" subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230.
The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.