LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 84TH LEGISLATIVE REGULAR SESSION March 2, 2015 TO: Honorable Jane Nelson, Chair, Senate Committee on Finance FROM: Ursula Parks, Director, Legislative Budget Board IN RE:SB330 by Creighton (Relating to the computation of the franchise tax.), As Introduced Estimated Two-year Net Impact to General Revenue Related Funds for SB330, As Introduced: an impact of $0 through the biennium ending August 31, 2017. Additionally, the bill will have a direct impact of a revenue loss to the Property Tax Relief Fund of ($3,490,989,000) for the 2016-17 biennium. Any loss to the Property Tax Relief Fund must be made up with an equal amount of General Revenue to fund the Foundation School Program.
LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 84TH LEGISLATIVE REGULAR SESSION
March 2, 2015
TO: Honorable Jane Nelson, Chair, Senate Committee on Finance FROM: Ursula Parks, Director, Legislative Budget Board IN RE:SB330 by Creighton (Relating to the computation of the franchise tax.), As Introduced
TO: Honorable Jane Nelson, Chair, Senate Committee on Finance
FROM: Ursula Parks, Director, Legislative Budget Board
IN RE: SB330 by Creighton (Relating to the computation of the franchise tax.), As Introduced
Honorable Jane Nelson, Chair, Senate Committee on Finance
Honorable Jane Nelson, Chair, Senate Committee on Finance
Ursula Parks, Director, Legislative Budget Board
Ursula Parks, Director, Legislative Budget Board
SB330 by Creighton (Relating to the computation of the franchise tax.), As Introduced
SB330 by Creighton (Relating to the computation of the franchise tax.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for SB330, As Introduced: an impact of $0 through the biennium ending August 31, 2017. Additionally, the bill will have a direct impact of a revenue loss to the Property Tax Relief Fund of ($3,490,989,000) for the 2016-17 biennium. Any loss to the Property Tax Relief Fund must be made up with an equal amount of General Revenue to fund the Foundation School Program.
Estimated Two-year Net Impact to General Revenue Related Funds for SB330, As Introduced: an impact of $0 through the biennium ending August 31, 2017.
Additionally, the bill will have a direct impact of a revenue loss to the Property Tax Relief Fund of ($3,490,989,000) for the 2016-17 biennium. Any loss to the Property Tax Relief Fund must be made up with an equal amount of General Revenue to fund the Foundation School Program.
General Revenue-Related Funds, Five-Year Impact: Fiscal Year Probable Net Positive/(Negative) Impact to General Revenue Related Funds 2016 $0 2017 $0 2018 $0 2019 $0 2020 $0
2016 $0
2017 $0
2018 $0
2019 $0
2020 $0
All Funds, Five-Year Impact: Fiscal Year Probable Revenue (Loss) fromProperty Tax Relief Fund304 2016 ($1,729,879,000) 2017 ($1,761,110,000) 2018 ($1,754,195,000) 2019 ($1,786,846,000) 2020 ($1,812,016,000)
Fiscal Year Probable Revenue (Loss) fromProperty Tax Relief Fund304 2016 ($1,729,879,000) 2017 ($1,761,110,000) 2018 ($1,754,195,000) 2019 ($1,786,846,000) 2020 ($1,812,016,000)
2016 ($1,729,879,000)
2017 ($1,761,110,000)
2018 ($1,754,195,000)
2019 ($1,786,846,000)
2020 ($1,812,016,000)
Fiscal Analysis
The bill would amend Chapter 171 of the Tax Code, regarding the franchise tax, by changing the way taxable entities determine margin for computation of franchise liability. Under current law, a taxable entity makes an election to subtract one of four amounts from the entity's total revenue to determine margin: $1 million; the entity's cost of goods sold; the entity's compensation costs; or an amount equal to 30 percent of the entity's total revenue. Under the bill's provisions, that election would be replaced by a margin calculation that subtracts the sum of $1 million, the entity's cost of goods sold, and the entity's compensation costs from total revenue. The bill would delete or repeal portions of the code that reference electing one of the existing amounts from total revenue. Note: The EZ calculation would not be directly affected by this bill. The bill would take effect January 1, 2016, and apply to franchise tax reports due on or after that date.
Methodology
The estimated fiscal impact is based on the Comptroller's 2016-2017 Biennial Revenue Estimate and the Comptroller's franchise tax files.
Local Government Impact
No fiscal implication to units of local government is anticipated.
Source Agencies: 304 Comptroller of Public Accounts
304 Comptroller of Public Accounts
LBB Staff: UP, KK, SD
UP, KK, SD