Texas House Bill HB276

Texas 2019 - 86th Regular

Caption

Relating to a deduction under the franchise tax for certain contracts with the federal government.

Impact

If enacted, HB276 will directly affect the taxable margin calculations for businesses that enter into contracts that adhere to federal acquisition regulations. By allowing specific expenses related to military service members and additional costs outlined under federal regulations to be deducted, the bill may encourage more contractors to engage with federal projects. Furthermore, the stipulated changes are designed to provide relief for businesses by ensuring that they are not unduly taxed on transactions that support national interests.

Summary

House Bill 276 aims to amend the Texas Tax Code, specifically targeting the provisions concerning deductions under the franchise tax for certain contracts with the federal government. The bill proposes that businesses engaging in contracts with the federal government be eligible to deduct certain expenses from their taxable margin. This change is positioned to support companies that provide goods or services to federal entities, potentially enhancing their financial viability while serving the government.

Contention

While there may be broad support for the idea of supporting businesses that collaborate with the federal government, there could also be concerns regarding the implications of such tax deductions. Critics may argue that the deductions could disproportionately benefit larger corporations involved in government contracting, potentially leaving smaller businesses at a disadvantage. Additionally, discussions may arise around the equity of tax benefits and the impact on state revenue, questioning if such deductions could lead to a decrease in overall tax contributions from businesses.