By: Bonnen of Brazoria, et al. H.B. No. 32
(Senate Sponsor - Nelson)
(In the Senate - Received from the House April 30, 2015;
May 6, 2015, read first time and referred to Committee on Finance;
May 21, 2015, reported adversely, with favorable Committee
Substitute by the following vote: Yeas 12, Nays 1; May 21, 2015,
sent to printer.)
Click here to see the committee vote
COMMITTEE SUBSTITUTE FOR H.B. No. 32 By: Nelson
A BILL TO BE ENTITLED
AN ACT
relating to the computation and rates of the franchise tax;
decreasing tax rates.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. (a) TITLE. This Act shall be known as the
Franchise Tax Repeal Act of 2015.
(b) PURPOSE AND FINDINGS. The legislature finds that the
tax imposed by Texas Tax Code Chapter 171 has not provided
sufficient reliability for property tax relief. It is the intent of
the legislature to promote economic growth by repealing the
franchise tax.
SECTION 2. Sections 171.002(a) and (b), Tax Code, are
amended to read as follows:
(a) Subject to Sections 171.003 and 171.1016 and except as
provided by Subsection (b), the rate of the franchise tax is 0.75
[one] percent of taxable margin.
(b) Subject to Sections 171.003 and 171.1016, the rate of
the franchise tax is 0.375 [0.5] percent of taxable margin for those
taxable entities primarily engaged in retail or wholesale trade.
SECTION 3. Sections 171.1016(a) and (b), Tax Code, are
amended to read as follows:
(a) Notwithstanding any other provision of this chapter, a
taxable entity whose total revenue from its entire business is not
more than $20 [$10] million may elect to pay the tax imposed under
this chapter in the amount computed and at the rate provided by this
section rather than in the amount computed and at the tax rate
provided by Section 171.002.
(b) The amount of the tax for which a taxable entity that
elects to pay the tax as provided by this section is liable is
computed by:
(1) determining the taxable entity's total revenue
from its entire business, as determined under Section 171.1011;
(2) apportioning the amount computed under
Subdivision (1) to this state, as provided by Section 171.106, to
determine the taxable entity's apportioned total revenue; and
(3) multiplying the amount computed under Subdivision
(2) by the rate of 0.331 [0.575] percent.
SECTION 4. This Act applies only to a report originally due
on or after the effective date of this Act.
SECTION 5. The comptroller of public accounts shall conduct
a comprehensive study, no later than September 30th, 2016, to
identify the effects of economic growth on future state revenues.
The results of the study shall be reported to the governor and the
Legislative Budget Board. The report should identify revenue
growth allocation options to promote efficiency and sustainability
in meeting the revenue needs of this state, including revenues
allocated by Tax Code 171.4011, upon repeal of the franchise tax.
SECTION 6. This Act takes effect January 1, 2016.
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