Texas Public Policy Foundation economist Vance Ginn says the state’s governor and legislators from both parties are coming together in agreement over eliminating Texas’ business margins tax.
In a recent blog post for the Texas Public Policy Foundation, Ginn pointed to Gov. Greg Abbott’s State of the State speech where the governor called for continuing to cut the business franchise tax.
Ginn made the case that past legislation that cut the margins tax paved the way for legislation to all but eliminate the tax.
“After cutting the franchise tax rate by 25 percent last session for savings of $2.6 billion, the Texas Senate and House have legislation moving through the process that would put the franchise tax, also known as the margins tax, on a path to elimination,” Ginn said in the blog. “This is essential because businesses do not pay taxes; people do in the form of higher prices, lower wages and fewer jobs available.”
Ginn said Senate Bill 17, which is waiting to be heard in the House, will eventually cut the margins tax.
“S.B. 17 is a tax cut ‘trigger’ bill whereby half of the estimated general revenue for the upcoming biennium that exceeds a 5 percent increase from the prior biennium would trigger a cut in the margins tax rates each budget period until elimination,” Ginn said. “If you just consider the reduction in tax payments, even the most conservative estimates indicate $5 billion in new personal income and almost 42,000 new private-sector jobs five years after elimination."