Court Ruling Allows Fixes to Franchise Tax Inconsistencies

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.

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2 Responses to Court Ruling Allows Fixes to Franchise Tax Inconsistencies

  1. I, personally, think most of the new changes are a good thing. Of course, not all will be positive but in general they seem to be aimed at helping smaller businesses get off their feet with tax breaks and educational funding assistance. Texas seems to be somewhat atypical in this regard though.

  2. AdamC says:

    It seems there are some big legislation changes in the works for franchises and franchisees.
    They seem to be aimed at spurring growth and development, but it’s always a little hard to tell until they are tried and tested.
    I’m inclined to listen to Texas Association of Business on this one though…
    More tax is more tax.

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