Texas Senate Bill SB859

Texas 2013 - 83rd Regular

Caption

Relating to a sales and use tax exemption and a franchise tax credit related to certain research and development activities.

Impact

By exempting tangible personal property and qualified services from sales and use taxes, SB859 is designed to lower the financial burden on companies engaged in qualified research activities. Furthermore, the introduction of a franchise tax credit based on qualified research expenses encourages companies to increase their investment in research within Texas. This is expected to enhance the state's competitive edge in the high-tech industry and might lead to strategic partnerships between private entities and educational institutions, fostering a more robust innovation ecosystem.

Summary

SB859 aims to provide both a sales and use tax exemption and a franchise tax credit specifically targeted toward certain research and development activities conducted within the state of Texas. The legislative findings suggest that while Texas accounts for a significant portion of the national economic activity, its investment in research and development is comparatively low. The bill seeks to encourage private-sector investment in research to foster innovation, create high-paying jobs, and promote economic growth within the state.

Sentiment

General sentiment around SB859 is positive among business communities and economic development advocates. Supporters of the bill argue it is a critical step toward addressing the disparity in research investments and enhancing Texas's position as a leader in technology and innovation. However, there are concerns about the effectiveness of tax credits in driving significant increases in research activity and fears over the potential implications for tax revenues. Critics may question whether the resources allocated for these tax exemptions and credits could be better used elsewhere.

Contention

Notable points of contention include discussions regarding the potential long-term fiscal impacts of the tax credit on the state's budget and whether the criteria for 'qualified research' are sufficiently inclusive to truly benefit small and mid-sized companies. Lawmakers debate the balance between incentivizing large companies, which may already have the resources for research, versus supporting smaller entities that may struggle to compete for these benefits. Stakeholders worry about unintended consequences that might arise from increased state intervention in the tax code for research funding.