AUSTIN – In an effort to reduce taxes on businesses and simplify the state’s business tax code, State Rep. Scott Turner (R-Frisco) has introduced a bill in the Texas House calling for a phase-out and repeal of the margin (franchise) tax.
His House Bill 607 is identical to Senate Bill 179 introduced by State Senators Ken Paxton and Dan Patrick.
According to the newly-elected first-term legislator, the margin tax established in 2006 has failed to meet revenue expectations, is too complicated and many say it is unfair, because it taxes businesses irrespective of their profits.
Turner wrote in a news release that it is time to repeal the tax, because the $1 million exemption is set to expire this year.
“The margin tax must be repealed,” he said. “It is hurting businesses, who are already strapped in this tough economy. Businesses spend billions of dollars every year on tax compliance alone and that’s just wrong.”
As a small businessman, Turner said he has witnessed first-hand the impacts of heavy-handed government taxation and regulation. He is currently the Director of Business Development and Corporate Chaplain at Systemware, Inc.
“If we want to grow our economy, the government has to get out of the way,” he said. “Bottom line. the margin tax is bad for business, which means it’s bad for Texas.”
Turner’s legislation would phase out the tax by Jan. 1, 2017, by reducing the top tax rate businesses pay by 25 percent each year from 2014 to 2016.
It maintains the $1 million exemption for small businesses and removes the $50 penalty for failure to file a margin tax report on those entities that do not owe the tax.
He explained the margin tax came about in 2006, as the Texas legislature looked for ways to increase the number of taxpayers and generate more revenue to reduce local property taxes.
As a result, legislators revised the franchise tax, which now looks like a cross between a modified gross receipts tax and a corporate income tax.
Turner said he expects the bill to be referred to committee in coming weeks, now that House Committees have been assigned.
Also a former pro football player, Turner represents Texas House District 33, which includes all of Rockwall County and portions of Collin County. He currently serves on three House Committees:
By J.J. Smith, Publisher