Texas House Bill HB599

Texas 2017 - 85th Regular

• Filed: 12/14/16

Caption

Relating to the decrease of the rates of the franchise tax under certain circumstances and the expiration of that tax.

Impact

The implementation of HB599 would alter the existing franchise tax codes, making them more responsive to economic conditions. By reducing tax rates, the bill seeks to lighten the financial burden on businesses, particularly those in retail and wholesale sectors, thereby encouraging growth and job creation. It also aims to simplify tax compliance for these entities, making it easier for them to navigate their tax obligations. The bill could lead to increased investment and expansion of businesses in Texas as they benefit from lower tax liabilities.

Summary

House Bill 599 proposes significant changes to the franchise tax structure in Texas, focusing on reducing rates under specified circumstances and ultimately aiming for the tax's expiration. Under the amendments, the franchise tax rate for retail or wholesale trade entities would decrease from 0.75% to 0.375%. Furthermore, the bill introduces automatic adjustments to the tax rates based on the projected growth of general revenue funds, potentially allowing the rates to be lowered to zero in surplus years. This systematic approach to tax adjustments is intended to stimulate economic activity and provide relief to businesses.

Contention

Opposition to HB599 may arise from concerns that such tax cuts could negatively impact state revenue, leading to potential deficits in funding for public services. Critics might argue that while tax reductions could foster business growth, they may not adequately compensate for the loss in revenue required for essential state programs. There may also be discussions regarding the fairness of reducing the franchise tax solely for certain sectors, potentially leading to calls for broader tax reform that addresses the needs of all businesses and ensures equitable contributions to the state's finances.