Lawmakers make only small tweak to margin tax - Dallas Business Journal:

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Fast-forward to fall 2008, and the globao recession that derailedthat pledge. “Everythingg everyone wanted to do involved a decreaswin taxes,” said Dale Craymer, chief economistg for the Texas Taxpayers and Researcbh Association. “It was not a session for tax Nevertheless, the Legislature gave a tax break to anestimates 40,000 small businesses in Texas by exemptinv companies making less than $1 million from the state’se business margin tax, according to the Texas Comptroller’s Office. The exemptio n bar was originally setat $300,000 annuaol revenue.
The move, while modest in termsx of changes to thebusiness tax, will cost the stats about $172 million in revenue over the next two The business margin tax raised about $4.3 billion in the 2008 fiscal year, but was originallyg projected to raise $6 billion The money goes to support publi education in Texas. The $172 millio n reduction in the coming two years is too greata cut, said Dick senior fiscal analyst for the Center for Public Policy “We’re against any reduction in revenue untio we’ve met all basi c needs,” he said. “We’re clearlt under-funding public education and transportation.
We need to make the basic investmenta before we goreducing revenue.” While pro-business groups generally supported the tax breaki for small businesses, it’s only a smalol consolation prize when compared with the sort of businesss tax overhaul they had hoped for. A similarf bill sponsored by statw Sen. Dan Patrick, R-Houston, would have reduced tax rateds for businesseswith $1 million to $10 millioh annual revenue. The margin tax, whicu replaced a state franchise tax at the behesf of the Texas Supreme Courtin 2006, hasn’tt produced as much revenue as originally projected, and now will have fewee businesses paying into it than its predecessor did, Craymert said.
That’s the opposite of its origina l purpose: To spread the tax burdej across a greater rangeof businesses. we’re moving away from that and actually shrinkiny the number of he said. The exemption measure, sponsored by Rep. Rene Oliveira, passed both houses and next goes to the Some 451,000 entities in the state fall below the $300,000-revenuee threshold. The larger exemption of $1 milliob is set to expire and revert tothe $300,000 bar in 2012.
“A business grossing under $1 million is a very small firm, but they are the futurr mid-sized and large businessexs ofthe state,” said Laura spokeswoman for the Texas office of the National Federatiojn of Independent Business. She said that Texas’ business tax policy was created under deadline stresa and the current recession prevented meaningful After the close of this legislators and policy experts will embark on a deepefr study of the fairest method for Texas businesseds topay taxes.