As a result of the global economic downturn, Texas is facing a multi-billion
dollar budget shortfall. Texas has faced similar challenges, most recently in
2003. The Legislature could have taken the easy way out and raised taxes, but
instead they made the hard choices to cut taxes and reduce the size of
The 2011 session will present similar if not more difficult circumstances. There
is true hope, though, for the preservation of our solid business climate. State
leaders including Gov. Rick Perry, Lt. Gov. David Dewhurst and Speaker Joe
Straus have pledged that there will be a balanced budget with no new taxes. That
line-in-the-sand approach of the leaders means that our state will need creative
solutions to address the economic challenges we face. It also means, however,
that anti-business legislators will be jockeying in the media and among their
peers against that fiscally conservative approach.
To see that Texas stays the course against new taxes and the growth of
government, TAB proudly supports the following legislative policies:
Casino gambling. Support casino gambling in order to reduce the margin
Equity. Support legislative measures to equitably distribute the burden
of business sector taxes among all businesses, including service and
manufacturing. Also, support legislation ensuring that homeowners and businesses
share support for public education.
Fairness. Support the following Council on State Taxation taxpayer
fairness proposals: - Provide taxpayers equal interest rates on overpayments and
- Provide for a 90-day protest period for taxpayers;
- Allow taxpayers an automatic filing extension with a federal extension; and
- Eliminate pay-to-play that currently requires Texas taxpayers to prepay tax or
post a bond to obtain access to the trial court level.
Federal funding. Support state policies and programs that maximize the
receipt and use of federal matching and other funds for state purposes.
Financial soundness for state disaster preparedness. Support improvements
to the State General Fund to protect the state from significant losses in the
event of a major hurricane to provide a more stable, well-protected coastal
business environment, planning for quicker financial recovery, and avoiding
increased business taxes in the event of a loss to the state’s general fund.
Fiscal policy. Support requiring government at every level to practice
fiscal responsibility. State and local spending controls are desirable that
restrict budget growth beyond population and inflation indices.
Franchise (margin) tax. Support a graduated approach to the franchise
(margin) tax for businesses that have sales less than $1 million.
Franchise (margin) tax—Business losses. Support authorizing a business’s
losses on the franchise (margin) tax to be carried forward for up to 10 years.
Franchise (margin) tax--Exemption of flow-through funds. Support an
exemption from the franchise (margin) tax of all flow-through funds that are
mandated by contract to be distributed to other entities.
Franchise (margin) tax--Rebating excess revenue. Support rebating to
taxpayers any excess revenue collected from the franchise (margin) tax.
Franchise (margin) tax—Research and development tax credit. Support
reinstating the research and development tax credit (provided under the previous
franchise tax) and allowing it to be carried forward. Franchise (margin)
tax--Subtracting compensation paid to independent contractors. Support allowing
businesses that elect to subtract compensation in computing their taxable margin
to include wages and cash compensation paid to independent contractors if the
total revenue of that business is below $2 million.
Gross receipts user fees. Oppose any attempt to retroactively or
prospectively impose a percentage of gross receipts use fee or street crossing
surtaxes on the transmission of natural gas, crude oil petroleum products,
petrochemicals and other goods, through pipelines.
Gross receipts tax. Oppose the imposition of a gross receipts tax in
Incentives. Support government tax policy that is effective in increasing
investment to create new jobs and expand economic activity. This would include
specific exemptions, like those for manufacturing use, construction and
electricity use, as well as, reasonable abatements, enterprise funds, and
Inventory tax. Support elimination or reduction of local inventory taxes.
Texas is one of only six states that permit the levy of a property tax on
inventories. This places the state at a severe economic disadvantage.
Local Option sales tax. Oppose any additional local option sales tax
increases above the current 2 per cent cap.
Location of payor. Oppose any component of a business or franchise tax
that penalizes those located in Texas (location of payor).
Mandates. Oppose unfunded government mandates that shift the cost of
financing programs to either the private sector or other levels of government.
Privatization. Encourage privatization efforts in government for
increased efficiency and to reduce government spending.
Real estate transactions. Oppose mandatory price disclosure on commercial
real estate transactions.
Regulatory policy. Support legislative efforts to maintain a regulatory
climate that does not impose hidden taxes on employers through excessive fees
and fines and reduces excessive regulations to promote, rather than impede,
economic growth and job creation.
Relocation of facilities in the right of way (ROW). Support a return to
previous law where a governmental entity mandating a company to move facilities
located within the ROW paid for that relocation.
Research and development tax incentive. Support the continued expansion
of tax incentives designed to aid our state’s research and development
industries. Expansion of the Research and Development Tax Credit program would
be one way to do this.
Right-of-way (ROW) fees. Support legislation to promote consistency among
municipalities in right-of-way fees and right-of-way crossing fees assessed
telecommunications providers, electric utilities, and pipeline companies with
facilities in city rights of way. Also, support limiting such fees to city cost
of administration and maintenance of the rights of way, and requiring that such
fees be assessed in a competitively neutral manner.
Sales tax--Exemption for research & development. Support a sales tax
exemption for the cost of material and equipment purchased for the purpose of
research and development.
Split roll. Oppose any plan that splits the property tax rolls either by
rate or by making one a state-wide tax. Oppose any tax plan or component that
allows the state to treat businesses differently from homeowners.
Small business tax relief. Maintain franchise (margin) tax relief for
State budget. Continue to support fiscal restraint in state spending. TAB
will continue to seek savings by focusing on increased efficiency in the use of
state resources while simultaneously urging a reduction in the state’s tax
State spending on Medicaid and CHIP. Support legislation that promotes
budget certainty and budget savings at the state level. Seek federal flexibility
to maintain control of state spending in Medicaid and CHIP.
State tax system. Support a balanced state tax system that encourages the
savings and investment necessary for the creation of jobs and that does not
place a disproportionate share of the tax burden on business. Any revision in
the business tax structure should reduce the percentage of state and local taxes
paid by business or be revenue neutral and also reduce the administrative
Tax equity. Support legislation that promotes equity in the taxing of
insurers, recognizing that premium taxes result in higher costs for consumers.
Tax exemption for pollution control equipment. Oppose attempts to repeal
or weaken the property tax exemption for pollution control equipment.
Video lottery terminals (VLTs). Support legislation to allow the voters
to decide whether to permit the installation of interactive video lottery
machines with the funding to be dedicated to schools.
Windfall profits tax. Oppose efforts to impose “windfall profits taxes”
or to penalize companies for substantial and sudden profits.
Votes. Support legislation that would require a 2/3rds vote of the Texas
Legislature in order to raise state taxes.