Relating to the computation of the franchise tax.
The implications of SB330 for state laws include a tightened framework for consideration of costs in franchise tax computation. By limiting the aforementioned deductions, the bill especially affects businesses engaged in certain industries including transportation and entertainment, which could result in higher taxable margins. Furthermore, the alterations in defining 'compensation' and what constitutes allowable deductions may significantly impact small businesses and their ability to provide competitive wages.
Senate Bill 330 aims to amend the Texas Tax Code regarding the computation of the franchise tax, thereby impacting how taxable entities report and calculate their margins. The bill introduces changes to the definitions and calculations surrounding the taxable margin, emphasizing both the cost of goods sold and compensation that can be deducted. Notably, it reinforces provisions that disallow financial deductions for wages paid to undocumented workers, a measure that has drawn considerable focus during discussions around the bill.
Notable points of contention around SB330 include the restrictions placed on compensation deductions for wages paid to undocumented workers. Proponents argue that this measure ensures tax compliance and supports local job markets, while opponents contend it could disproportionately affect industries reliant on such labor, further complicating tax obligations for smaller entities that might struggle with compliance. The balance between enforcing tax regulations and fostering a supportive business environment has surfaced as a critical debate within legislative discussions.