04/03/2007
CONTACT: Will Newton or Laura Stromberg, (512) 476-9847
Group Calls for Tax Relief, Increase in Small-Business Exemption
AUSTIN, Texas -- The National Federation of Independent Business, Texas' leading small-business advocacy group, today made several recommendations that would reform the gross receipts-based "margins" tax to more fairly distribute the tax burden among our state's businesses.
"The new business tax must be amended to ensure that Texas' smallest businesses do not bear the toughest burden," said Will Newton, NFIB/Texas executive director. "Gross receipts taxes have proven to be increasingly burdensome on smaller firms. The current structure punishes businesses that are struggling or marginally profitable by creating unfair tax liability."
NFIB/Texas is calling for an exemption from the tax for small businesses that are marginally profitable or not profitable. Lawmakers must include a provision in state statute that eliminates tax liability for these businesses. In a 2007 NFIB/Texas State Ballot, this issue had the support of an overwhelming 82 percent of respondents.
"Texas small-business owners have been faithfully paying the state's old franchise tax for years," said Kurt Summers, who owns Austin Generator Service. "This new gross receipts tax structure, as currently written, places the lion's share of the business tax burden directly on the backs of Texas small-business owners.
"Not only does this new tax do nothing to relieve the burden for us; it makes things harder on those who have been playing by the rules, paying the taxes and creating jobs," added Summers.
The current tax structure exempts businesses with less than $300,000 in gross annual receipts. This exemption must be dramatically increased if legislators truly want to help small business in their communities. NFIB/Texas proposes increasing the exemption to at least $1 million, and it is asking lawmakers to propose a constitutional amendment that would make it difficult for future legislators to increase this tax.
"It is the state's duty to ensure that all businesses are taxed fairly and bear an equal burden," Newton added. "The current franchise tax load is now being borne by the state's small and independent businesses."
Another NFIB/Texas recommendation addresses limiting the tax liability of all businesses under $20 million in gross to no more than a 100 percent increase over their tax liability from the previous year.
"If a small business' revenues have remained static yet it is forced to pay 100 percent or more than it did in 2006, this could cause tremendous upheaval in the Texas economy and lead to job cuts and business failures."
