The Unloading Zone: New Business Tax by Rep. Ken Paxton with an Introduction by Mr. Unloadingzone

Below is an article from Texas State Representative Ken Paxton on Texas's New Business Tax. I applaud Mr. Paxton for opposing the bill and writing the article to inform the public.

Texas is in trouble. For a good while, it was the new go-to place for employers and anyone interested in a Real Estate bargain, compared to the rest of the country.

Texas has no State Income Tax, plenty of restaurants, inexpensive commercial property and the housing costs are a steal compared to most of the country. We are the only State that has it's own energy grid, so we don't get blackouts.

There used to be a lot more good things to say, especially about the cost of living, but they're not true anymore.

In the Dallas/Fort Worth area, which has experienced phenomenal growth over the last ten years, property taxes continue to rise to the point where you can't sell your home for the appraised value in many cases.

Governor Perry and TxDot, the Texas Transportation Department, are now hell-bent on turning every new highway into a toll road. In some towns, you can't even go to the grocery store without paying a toll. And the tolls are not cheap, either.

State Highway 121 (I guess they'll have to change the name to Toll Road 121), when completed, will cost the average commuter who drives it's length $1800 a year in tolls....to start! Gas is already hitting $4 a gallon for regular and will only go higher.

Texas does have a dedicated fund; Fund 6, where all the gas tax money goes and is supposed to be used for new roads and maintenance. But the Governor and the Legislature have been raiding Fund 6 to support other programs to the point where it's unable to fund all the road construction needed. Enter the Toll Roads.

And lets not forget the politically correct $1 a pack increase in the cigarette tax (exempting cigars, which the Governor likes to smoke).

The sales tax in most communities is maxed out at 8.25% with calls to increase it further. And to make Texas even more "business friendly", House Bill 3 or the Franchise Tax Bill, goes into effect this year.

It "recalculates" the way businesses are taxed in Texas. In other words, it raises taxes on businesses.

The last 10 years of growth Texas has experienced has been due in large part to Corporations moving their operations and headquarters to Texas for the economic advantages. But greed in Austin is taking it's toll as relocation's are dropping. Especially in a recession, companies need to justify the expense of moving or opening their businesses in Texas. And that advantage is rapidly vanishing.

I recently published another article which described the gap between rich and poor in Texas growing, with the middle class disappearing. A big contributor to that is the illegal immigration problem Texas is experiencing.

It costs money to provide free health care, education, and social services to illegal aliens who don't pay taxes.

More and more, the reasons for Texas's growth are vanishing and with it the tax base to pay off the billions of dollars worth of State and Local Bond debt.

Austin's solution? Lets discourage businesses from relocating to Texas. Here is Rep. Paxton's article from his April 17th publication, Capitol Steps, on:

New Business Tax

Starting in 2008, Texas businesses are subject to the revised franchise tax, also known as the margins tax. This new tax is a result of House Bill 3, which the Legislature passed in May 2006. House Bill 3 restructured the state's existing franchise tax to expand the tax to include more businesses and change how the tax is calculated.

I have strongly opposed this tax since it was originally introduced during a special session in 2006. I am concerned about the financial burden this tax places on small businesses. Additionally, this tax is extremely complicated and time-consuming for small business owners, many of whom already work extended hours for the sake of their businesses. As a result of the new State Franchise Tax, many small businesses in our area are faced with tough decisions, such as increasing rates for services, eliminating personnel, abandoning plans for expansion, or closing their doors altogether.

Last year, the Legislature passed House Bill 3928, which modified aspects of the margins tax before it went into effect. This bill provides small businesses with some relief from the tax by offering a graduated, discounted rate. This bill was also supposed to simplify the tax, however after hearing from several tax professionals, I understand this tax is still
extremely complicated.

In fact, Comptroller of Public Accounts Susan Combs has recently acknowledged the complexity of this tax and the difficulties with using the electronic reporting system. As a result, Comptroller Combs extended the deadline for businesses who are unable to meet the May 15 due date for filing. These businesses have an additional 30 days to submit their returns or file an extension without a penalty.

Meanwhile, the National Federation of Independent Business - Texas is hosting a press conference in Austin next week to announce the formation of a coalition to reform the new Margins Tax. This organization has also had serious concerns with this tax from the beginning and is now working with small businesses from around the state to find a solution to make this tax more equitable and less burdensome for small businesses. I am confident that the coalition will offer a number of solutions to remedy the problems created by the margins tax. I look forward to working with this coalition in preparation for next legislative session.

Texas has enjoyed a competitive advantage as a result of its business-friendly policies. I believe we must maintain this edge in order to encourage job growth and investment in our State.