Texas House Bill HB2961

Texas 2017 - 85th Regular

Caption

Relating to the exclusion of certain payments from total revenue for purposes of the franchise tax.

Impact

By implementing this bill, Texas aims to enhance its competitiveness within the information technology sector. The exclusion of subcontracting payments may encourage more businesses to engage in IT staffing operations by improving their financial viability. This could lead to increased employment opportunities within the state as larger contracts are more likely to be approved when companies can reduce their taxable revenue. It can also promote growth in the tech sector, which is increasingly vital for the state's economy.

Summary

House Bill 2961 proposes a change to the Texas Tax Code concerning the franchise tax obligations of entities involved primarily in information technology staffing. The bill specifically allows these entities to exclude certain subcontracting payments from their total revenue calculations for franchise tax purposes. This aims to facilitate better financial reporting for IT staffing companies, as the exclusion may reduce the overall taxable amount, potentially easing their tax burden.

Contention

While the bill primarily benefits IT staffing companies, there may be concerns regarding the implications of tax exemptions on public revenue. Critics might argue that such exclusions could exacerbate disparities in tax contributions among different industry sectors, particularly if similar exemptions are not available to other types of businesses. Additionally, discussions around the effectiveness of the franchise tax and its structure could draw attention, asking whether such specific amendments are the best method to support growth in the tech industry.