Texas Senate Bill SB410

Texas 2019 - 86th Regular

Caption

Relating to a franchise tax credit for ad valorem taxes paid by a taxable entity on certain inventory.

Impact

The implementation of this bill is expected to have a significant impact on state laws surrounding business taxation. By providing a credit against franchise taxes based on ad valorem taxes, the bill could alleviate financial pressures on small and medium enterprises, encouraging growth and expansion. It promotes a more competitive landscape by incentivizing businesses to maintain and enhance their inventory levels, potentially leading to increased sales and job creation in the retail sector.

Summary

SB410 proposes a franchise tax credit for Texas businesses that pay ad valorem taxes on qualified inventory. This bill aims to support taxable entities by allowing them to reduce their franchise tax burden based on the taxes they have already paid on inventory held for sale at retail. The legislation defines 'qualified inventory' and specifies exclusions for certain types of inventories, ensuring that the credit primarily benefits traditional retail businesses. The intent behind this tax incentive is to foster a more favorable economic environment for businesses operating within Texas.

Contention

While proponents of SB410 highlight its potential to stimulate economic growth and provide relief to businesses, the bill has drawn criticism regarding the implications of tax credits on state revenue. Opponents argue that such tax incentives might lead to a decrease in state funding for essential services if businesses do not fully utilize the credits. Additionally, there are concerns about ensuring that the benefits of the credits are equitably distributed among the various sizes of businesses, preventing larger enterprises from disproportionately benefitting from the program.