Don’t hold your breath

From the Austin American-Statesman: "A group of state lawmakers on Tuesday urged Congress to enact a universal sales tax for online purchases as a means of financing the reduction — and eventual elimination — of the state’s franchise tax, commonly called the margins tax."  Politicians continue exercises it futility.

As most practicing CPAs know, online retailers without physical locations in Texas don't have to collect Texas sales taxes.  It's a problem for Texas and many other states and it gives the online retailer a competitive advantage over local stores.  States and the feds have been stuggling to find a fix for many years.  Why state lawmakers think eliminating the Texas franchise tax will provide incentive for Congress to act is a mystery, but that's what's happening according to the Statesman.

The article goes on to say: "The group released an amended version of a study by economist Art Laffer that predicts Texas would gain $2.88 billion per year in revenue if Congress extended sales taxes to all online sales."  This is not news, but it's also not enough revenue to eliminate the franchise tax which provides almost $5 billion in state revenues for Texas.

Here's what might be the funniest line in the article: "Legislation is pending in Congress, but its chances of passing remain unclear given that body’s legislative record, especially in an election year."  The funny part is "…chances of passing remain unclear…"  My guess is chances of passage are very clear, between slim and none, with emphasis on the none.

If you are a digital subscriber to the Statesman, you can read the complete article Lawmakers pitch change to state business tax.

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One Response to Don’t hold your breath

  1. Bob Owen says:

    To help prove my point that online sales tax legislation won’t pass, I just read in the CPA Letter Daily that the senate “has said it will not pass any bills before midterm elections in November.”

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