As the legislative session winds down and lawmakers grapple over where our money will go during the coming biennium, the issue of meaningful franchise tax reform continues to find its way into news stories. The very definition of meaningful franchise tax reform is up for debate, but few lawmakers have acknowledged one thing: the answer is already out there.
It was answered on April 15 when Governor Rick Perry announced a tax relief plan supported by key lawmakers and business leaders across the state, including NFIB/Texas and its 24,000 members.
The question to meaningful franchise tax reform is an across-the-board 5 percent tax rate reduction and a $1 million deduction for all businesses grossing under the $20 million threshold.
Our Legislature has the opportunity to lessen the impact of the state’s onerous franchise tax on small businesses. Lawmakers continue to ask how they can enact meaningful franchise tax reforms. A solution was presented, but legislation has not followed.
Governor Perry’s proposal is straightforward and fair; there are no “budget gimmicks,” a term recently used by a lawmaker to describe concerns with the budgetary process. The proposal goes a long way in rebuilding some of the damage done by the current franchise tax structure, which has continued to punish businesses that do not make a profit or are only marginally profitable by continuing to tax them based on their gross receipts.
Freeing small business owners from even a portion of the state’s burdensome franchise tax is not a gimmick; it is a solution that will allow for business growth, increased employment, increased spending and increased revenue for the state. These are not talking points; these are the real-life benefits of meaningful franchise tax reform, and they should become key priorities for each and every one of our lawmakers before the clock runs out.
The National Federation of Independent Business is the nation’s leading small business association, with offices in Washington, D.C., and all 50 state capitals. Founded in 1943 as a nonprofit, nonpartisan organization, NFIB gives small and independent business owners a voice in shaping the public policy issues that affect their business. NFIB’s powerful network of grassroots activists sends their views directly to state and federal lawmakers through our unique member-only ballot, thus playing a critical role in supporting America’s free enterprise system. NFIB’s mission is to promote and protect the right of our members to own, operate and grow their businesses. More information about NFIB is available online at www.NFIB.com/newsroom.