(AUSTIN, TEXAS) March 30, 2016 — National Federation of Independent Business (NFIB)/Texas, the state’s leading small business association, gave invited testimony today on the impact of the franchise tax on small business in Texas at the Senate Finance committee hearing.
“As the voice of small business in the Capitol, we would like to formally thank the Senate and Texas Legislature for hearing our cry to repeal the dreaded franchise tax with the passage of HB 32 last session that provided a 25% cut across the board and kept the $1 million exemption for small business in place. We appreciate the inclusion of Section 1. (a) referencing the legislature’s intention to promote economic growth by repeal of the franchise tax.” said NFIB Executive Director Will Newton.
“Since its inception in 2006, this tax has been a failure and consistently fallen short of projected revenue estimates. After the 2013 legislation, NFIB’s Research Foundation found that a complete phase-out of the franchise tax would lead to 16,000 new private sector jobs in Texas. In a 2015 NFIB Member Ballot an overwhelming 82% of respondents called for a full repeal of the state franchise tax,” continued Newton.
This testimony comes on the heels of the American Legislative Exchange Council (ALEC) report on “State Tax Cut Roundup” where Texas ranked 11th in the nation for significant tax cuts. The report included that because of last session’s tax cut package “Texas taxpayers will save a total of $306.5 million in the 2016-2017 biennium fiscal window.” The report went on to state “Creating a tax and fiscal policy climate that is conducive to economic growth ensures that the economic pie is growing for everyone. Individuals, businesses and even government revenues benefit when people are free to save and invest more of their money.”
In a 2015 NFIB/Texas member survey, when asked how small business would translate franchise tax relief, here were the results:
· 17% said pay raises for their employees
· Over 16% said investment in new equipment and inventory
· Over 14% said job creation
· Over 13% would pay off business debts
· 13% would invest in capital improvements
· Lastly, 27% said all the above
NFIB/Texas has 21,000 dues-paying members representing a cross-section of the state’s economy from agriculture, construction, and manufacturing to wholesale, retail, and services. Additionally, NFIB/Texas membership is 96 percent comprised of businesses who have 40 employees or less and is the largest association advocating for small business in the Capitol.
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