When the margin tax became the Texas franchise tax, legislators took great pains to make sure it was not an income tax. Those great pains caused inconsistencies in the amount of taxes paid by different industries and even taxpayers in similar businesses. The Supreme Court’s ruling that an income tax can be levied on business entities, including partnerships and unincorporated associations, means the legislature has the opportunity to eliminate those inconsistencies.
Fixing the tax may not necessarily raise more revenue, however, and the Texas Association of Business says it shouldn’t because business taxes in Texas are already high. CPA Rep. John Otto (R-Dayton) says, "There should be a certain amount of revenue that the franchise tax can raise without being a hindrance to business, where we can remain competitive with other states."
While not calling for a tax increase, Rep. Mike Villarreal (D-San Antonio) says that when changes are made we need to have a tax that “grows with the economy.”
You can find all of this and more as Kate Alexander reports on different views about fixing the tax in the Austin American-Statesman.