Texas Senate Bill SB1081

Texas 2019 - 86th Regular

Caption

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

Impact

The proposed changes in SB 1081 are expected to strengthen the economic framework within Texas by incentivizing local businesses to pursue federal contracts. By permitting deductions for specific costs related to federal contracts, the bill could lead to increased competitiveness for Texas-based companies. Additionally, it may result in improved job creation and retention within the state, as businesses may have more resources to expand and hire additional employees.

Summary

Senate Bill 1081 aims to amend the Tax Code concerning the franchise tax deductions for certain contracts with the federal government. Specifically, the bill proposes to allow taxable entities to deduct costs associated with contracts or subcontracts for goods or services provided to the federal government. This adjustment is designed to alleviate financial burdens on businesses while enhancing their capacity to participate in federal procurement processes, thereby potentially increasing overall state economic activity.

Contention

While the bill is positioned as a mechanism for economic development, there may be concern regarding its implications on state revenue. Critics could argue that allowing greater deductions may reduce taxable income, which in turn could impact state revenues. Therefore, discussions on the effectiveness of the bill in stimulating economic growth versus its potential to create budgetary shortfalls will likely be a point of contention among lawmakers. Additionally, stakeholders may debate whether these incentives are sufficient to attract and sustain business infrastructure centered around federal contracts.