Texas House Bill HB2637

Texas 2015 - 84th Regular

Caption

Relating to apportionment of margin from receipts from the sale of locomotives for purposes of the franchise tax.

Impact

If enacted, HB2637 will impact how companies selling locomotives calculate their taxable receipts for franchise tax purposes. By basing the apportionment on the relative amount of railway infrastructure in Texas compared to the entire nation, the bill could potentially result in a reevaluation of tax obligations for locomotive sales within the state. This is particularly relevant given that Texas is a significant hub for railway operations, and such a change could either increase or decrease the tax burden on businesses depending on their sales volume and operational reach.

Summary

House Bill 2637 seeks to amend Texas Tax Code Section 171.106 by adding a new subsection that dictates how the apportionment of receipts from the sale of locomotives for franchise tax purposes is calculated. Specifically, it establishes a formula where the portion of taxable receipts from locomotives sold for use in interstate commerce is based on the ratio of the total miles of railway track in Texas to the total miles of railway track in the United States. This provision aims to ensure that a fair share of the state franchise tax revenue is attributable to business activities taking place within the state related to locomotives.

Sentiment

The sentiment around HB2637 appears to be cautiously optimistic among industry stakeholders, particularly those involved in the railway sector. Supporters argue that the bill creates a fairer method for calculating taxes, thus providing clarity and predictability for businesses engaged in interstate commerce. However, there is also some apprehension about how the changes may influence the overall tax landscape for businesses that rely heavily on locomotive sales, indicating a mixed sentiment focused on both economic viability and regulatory compliance.

Contention

Notable points of contention surrounding this bill include concerns about how the changes may disproportionately affect smaller companies that may not have extensive operational footprints outside Texas. Critics may argue that the new formula could create advantages for larger corporations that operate on a national scale while potentially disadvantaging local businesses. This debate underscores a broader discussion on the fairness and equity of tax codes, particularly in how they impact different sizes and types of businesses within the railway industry.