On Point Accounting & Tax

The Republican-controlled U.S. House of Representatives gave final approval on Wednesday to the biggest overhaul of the U.S. tax code in 30 years.

In sealing Trump’s first major legislative victory, Republicans steamrolled opposition from Democrats to pass a bill that slashes taxes for corporations and the wealthy while giving mixed, temporary tax relief to middle-class Americans.

The House approved the measure, 224-201, passing it for the second time in two days after a procedural foul-up forced another vote on Wednesday. The Senate had passed it 51-48 in the early hours of Wednesday. 

President Trump, who had emphasized a tax cut for middle-class Americans during his 2016 campaign, said at the start of a Cabinet meeting before the vote that lowering the corporate tax rate from 35 percent to 21 percent was “probably the biggest factor in this plan.”

Trump planned a tax-related celebration with U.S. lawmakers at the White House in the afternoon but will not sign the legislation immediately. The timing of the signing was still up in the air.

After Trump repeatedly urged Republicans to get it to him to sign before the end of the year, White House economic adviser Gary Cohn said the timing of signing the bill depends on whether automatic spending cuts triggered by the legislation could be waived. If so, the president will sign it before the end of the year, he said.

Business Friendly

In addition to cutting the U.S. corporate income tax rate to 21 percent, the debt-financed legislation gives other business owners a new 20 percent deduction on business income and reshapes how the government taxes multinational corporations along the lines the country’s largest businesses have recommended for years.

Millions of Americans would stop itemizing deductions under the bill, putting tax breaks that incentivize home ownership and charitable donations out of their reach, but also making tax returns somewhat simpler and shorter.

The bill keeps the present number of tax brackets but adjusts many of the rates and income levels for each one. The top tax rate for high earners is reduced. The estate tax on inheritances is changed so far fewer people will pay.

Once signed, taxpayers likely would see the first changes to their paycheck tax withholdings in February. Most households will not see the full effect of the tax plan on their income until they file their 2018 taxes in early 2019.

Source Reuters

Mary Taylor wants to reduce the size of state income tax form to a postcard.

Lt. Gov. Mary Taylor wants to deliver a “simpler, streamlined, customer-focused tax system” for Ohio taxpayers.

The Republican gubernatorial candidate proposed changes to the state’s tax system on Wednesday in remarks to the tax committee of the Toledo Regional Chamber of Commerce.

Noting the Kasich-Taylor administration has reduced taxes by about $5 billion over the past six years, Taylor proposed:

‒ Reducing the state income tax form to the size of a postcard. The 2016 individual income tax form could run 11 pages long with 60 pages of instructions and a simpler filing system will save both taxpayers and the state money, she said. Taylor shared no details how that would happen. “Some of the detail of the mechanics will continue to be fleshed out working with stakeholders and other tax experts,” said campaign spokesman Michael Duchesne.

‒ Adjusting income tax withholding tables to allow Ohioans to keep more of their money as they are paid. Current tables withhold about 20 percent more than needed to cover tax liabilities, extending an interest-free loan to the state, Taylor said. Such an adjustment would result in smaller refunds when Ohioans file their taxes.

‒ Changing policies to not punish Ohioans with interest and penalties for tax errors when they make “good-faith efforts” to comply.