Texas House Bill HB1499

Texas 2013 - 83rd Regular

Caption

Relating to a franchise tax credit for certain research and development activities.

Impact

By incentivizing research and development, HB1499 seeks to stimulate economic activity and innovation in Texas, particularly in regions that are typically underserved. The approach aims not only to attract businesses but also to promote job creation and improve local economies in these strategic investment areas. Furthermore, the bill mandates the Comptroller of Texas to publish a list of areas qualifying for these benefits, ensuring a transparent and yearly updated process for eligibility that aligns with the state's broader economic development strategies.

Summary

House Bill 1499 introduces a tax credit aimed at fostering research and development activities within Texas. The bill establishes a new subchapter under Chapter 171 of the Tax Code, which specifies that taxable entities conducting qualified research and basic research payments in designated strategic investment areas can claim credit against their franchise tax. The credit is set at five percent of the excess of qualified research expenses over a defined base amount and includes enhanced multipliers for research activities conducted in areas identified as strategic due to socioeconomic factors such as high unemployment and low per capita income.

Contention

The introduction of this bill may lead to discussions regarding the effectiveness and fairness of providing tax credits to certain businesses while potentially neglecting others. Some critics might argue that these targeted credits could create an uneven playing field among companies by favoring those able to relocate or expand their operations into the defined strategic investment areas, while others may not have such flexibility. Additionally, there could be debates surrounding the long-term sustainability of public finances when significant tax credits are provided, raising questions about the impacts on state revenues and public services.