Texas House Bill HB668

Texas 2015 - 84th Regular

Caption

Relating to the franchise tax liability of certain taxable entities.

Impact

The impact of HB668 is particularly significant for small businesses and start-ups, which may often experience losses in their initial operational phases. By exempting entities with zero or negative taxable income from paying franchise taxes, the bill seeks to promote business development and support economic activity in Texas. Consequently, this could potentially lead to an uptick in new business formations and expansion of existing businesses that are currently operating at a loss. This change is expected to contribute positively to the state’s economy overall by fostering an environment more conducive to business operations.

Summary

House Bill 668 proposes amendments to the Texas Tax Code specifically targeting the franchise tax liabilities of certain taxable entities. The bill introduces provisions that exempt taxable entities from paying tax if their taxable income is zero or less for a specified period. This aims to alleviate the tax burden on smaller businesses and those that are not generating profit during challenging financial periods. Additionally, it instructs the comptroller to adopt necessary rules to implement these amendments effectively.

Contention

Despite its intentions, HB668 may face scrutiny regarding how it defines 'taxable income' and the implications for revenue collection at the state level. Critics may argue that by removing tax obligations from certain entities, the state could experience a decrease in the funds available for essential public services that rely on tax revenues. Additionally, concerns about compliance and the effectiveness of the comptroller’s rule adoption in facilitating this legislative change could arise during discussions and potential amendments to the bill.