H.B. No. 32
AN ACT
rel
ating 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) This Act shall be known as the Franchise Tax
Reduction Act of 2015.
(b) The legislature finds that the tax imposed by Chapter
171, Tax Code, 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 30, 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 Section 171.4011, Tax Code, upon repeal of the
franchise tax.
SECTION 6. This Act takes effect January 1, 2016.
______________________________ ______________________________
President of the Senate Speaker of the House
I certify that H.B. No. 32 was passed by the House on April
29, 2015, by the following vote: Yeas 115, Nays 29, 1 present, not
voting; and that the House concurred in Senate amendments to H.B.
No. 32 on May 28, 2015, by the following vote: Yeas 133, Nays 10, 1
present, not voting, and that the House adopted H.C.R. No. 143
authorizing certain corrections in H.B. No. 32 on May 31, 2015, by
the following vote: Yeas 144, Nays 0, 2 present, not voting.
______________________________
Chief Clerk of the House
I certify that H.B. No. 32 was passed by the Senate, with
amendments, on May 24, 2015, by the following vote: Yeas 24, Nays
6, and that the Senate adopted H.C.R. No. 143 authorizing certain
corrections in H.B. No. 32 on May 31, 2015, by the following vote:
Yeas 31, Nays 0.
______________________________
Secretary of the Senate
APPROVED: __________________
Date
__________________
Governor