As part of the shared legislative priorities of the McKinney Chamber of Commerce and City of McKinney we identified taxes and spending as one of six key issues that significantly impacts our community’s ability to maintain a healthy economic climate to attract and retain jobs and investment and provide a high level of service to our residents and businesses. As part of those objectives it was specifically identified that the Franchise (margin) tax be reviewed and restructured. Business Tax Relief has been under discussion at the legislature and several bills regarding the Franchise Tax have been introduced including a bill from our own Senator Ken Paxton.
Last week, the Texas Association of Business (TAB) launched an on-line petition drive to encourage the passage of $1.8 billion in tax relief targeted at Texas small business with changes specifically to the Franchise Tax. “Small businesses are the job creators in Texas,” said Bill Hammond, TAB President and CEO. “We feel targeting tax relief towards small business will rev up the job creation engine in this state.”
The tax relief plan would make permanent the $1 million franchise tax exemption. This would allow businesses who have less than $1 million in taxable income to avoid paying the tax. It also creates a $1 million franchise tax deduction, where businesses could deduct their first $1 million in taxable income. If a business is paying taxes on $2 million a year now, this deduction would cut their tax bill in half creating an immediate stimulus for that business.
This plan will also bring more equity to the overall taxing system. “If a business has $900,000 in taxable income right now they don’t pay any taxes, but a business that has $1.1 million in taxable income pays taxes on that whole amount,” said Hammond. “Under this plan, that business would only pay taxes on the $100,000 in taxable income, instead of the full amount. This plan certainly creates more fairness than the current system does.”
The online petition is linked on the front page of the Texas Association of Business’s website, txbiz.org. In order to view the legislative priorities of the McKinney Chamber and City of McKinney click here.