Texas House Bill HB1788

Texas 2009 - 81st Regular

Caption

Relating to the minimum franchise tax amount for which no tax payment is due.

Impact

The bill is expected to have significant implications for small businesses within the state. By exempting businesses with revenues below the proposed threshold, the legislation is designed to reduce the tax burden on smaller entities that may struggle to meet their tax obligations. This move has been welcomed by business owners and small business advocates who argue that it will encourage business growth and job creation. On the other hand, the bill might have financial implications for state tax revenue, as fewer businesses will contribute to the franchise tax pool.

Summary

House Bill 1788 seeks to amend the Texas Tax Code by raising the minimum franchise tax threshold. Under the current law, taxable entities are not required to pay any tax if their computed tax is less than $1,000 or their total revenue is below $300,000. This bill proposes to increase the minimum franchise tax amount for which no tax payment is due, thereby exempting more businesses from tax liability based on their revenues. The new threshold aims to provide financial relief for smaller businesses across Texas, supporting local economic growth.

Contention

Some discussions around HB 1788 could revolve around the balance between creating tax exemptions for small entities while ensuring adequate state revenue. Critics may argue that increasing the exemption threshold could lead to significant gaps in the state's financing, which could affect funding for public services and programs. Proponents, however, would likely emphasize the necessity of supporting the economic vitality of smaller businesses, particularly in the aftermath of economic downturns. This ongoing debate reflects broader discussions about the role of taxation in fostering a healthy business environment.