Rep. Lon Burnam's (D-Fort Worth) HB 1735 is a personal income tax on incomes in excess of $100,000. The tax rates are graduated starting at 2% for those making less than $150,000 and increasing to 6% for incomes over $1 million.
The tax is proposed to help fund public education. The bill will undoubtedly be assigned to the House Ways and Means committee where the chairman, Rep. Rene Oliveira (D-Brownsville), has said he will give any bill a hearing if requested by the bill sponsor. Oliveira was quick to add, however, that, getting a hearing doesn’t mean getting a vote on the bill by the committee.
The Texas constitution requires the voters' approval for a Texas personal income tax.
Speaking of income taxes, CPAs continue to ask if a court challenge has been filed claiming the margin tax is an income tax and therefore invalid because the voters did not approve it. No lawsuits are known to have been filed as of today.
One of the arguments against the margin tax being considered an income tax is the fact that you have to pay the tax even if you don’t have income. Sen. Mike Jackson (R-La Porte) has filed SB 1037, which would change that. Jackson’s bill says if you report zero or less on the net income line of your federal return, you don’t have to pay any franchise tax. The bill does not apply to members of combined groups.