05/16/2008
CONTACT: Laura Stromberg, 512-476-9847
Groups Join With NFIB/Texas to Seek Immediate Reforms to Margin Tax
AUSTIN, Texas -- The National Federation of Independent Business, Texas' leading small business advocacy group, today announced the creation of the Texas Business Tax Coalition, a group of like-minded state business organizations joining forces to advance a legislative agenda that will make the new Texas Margin Tax less onerous on small business owners across the state.
The Texas Business Tax Coalition founding members include NFIB/Texas, the Independent Electrical Contractors of Texas, the Air Conditioning Contractors of America Texas Chapter, the Associated Plumbing-Heating-Cooling Contractors of Texas and the Texas Courier & Logistics Association.
The new coalition is calling for a handful of reforms that will significantly reduce the impact of this burdensome tax on the small business owner. Items on the coalition's legislative agenda include:
- Exempt from state tax liability small businesses that are losing money or are marginally profitable;
- Raise the small business exemption from $300,000 to a minimum of $1 million;
- Lower the margins tax rate by 50 percent for businesses with under $20 million in gross receipts;
- Allow deductions in their cost of employment for all contract labor used by Texas firms;
- Limit a business' increase under the margin tax to no more than 100 percent of its historic high under the old franchise tax; and
- Require a two-thirds vote of the Legislature before the margins tax rate can be increased;
"NFIB/Texas was the first business group to call for major reforms to this harmful new tax. Though we represent a significant portion of the state's small business owners, joining with other member-driven organizations makes our voice stronger," said NFIB/Texas Executive Director Will Newton. "NFIB/Texas believes our lawmakers passed this new business tax without enough information about its impact on the small business owner. When they see that tens of thousands of hard-working Texans are being harmed unnecessarily, we anticipate that they will want to work with us to reform it."
"Though we understood the need to revise the franchise tax to assure no entity is exempt, it should be reasonable and equitable. No business should owe any tax if it is not profitable or the tax would create a deficit. Neither of which exist with the new Margin Tax," said Renea Beasley, executive director of IEC of Texas.
"This is an entrepreneurial killer," said Rod Steinbrook with the Texas Courier & Logistics Association. "Don't forget, every business is a small business in the beginning. The Texas Margin Tax is a tax against small businesses and not good for the Texas economy."
Adds PHCC Executive Director Nancy Jones, "The only way we can successfully reform this margin tax is to join together in a strong coalition. My members are grateful for the opportunity to be part of this coalition; we all know there is strength in numbers."
"Most of Texas' businesses -- and our members -- are small family companies that comprise the backbone of the state's economy," said Todd McAlister, executive director of ACCA-Texas. "Increasing fuel costs have hit HVAC companies very hard, property taxes did not go down as promised, and now their franchise taxes have increased substantially, regardless of whether they are even making a profit. We are simply proposing some much needed, logical tax reforms."
In a recent survey of NFIB/Texas members, an overwhelming percentage of respondents said their property tax decrease -- if any -- was not enough to offset their business tax increase. More than 60 percent of all respondents paid the old franchise tax. Of those, 84 percent will see their tax burden increase by more than 100 percent over their old franchise tax bill. More than 40 percent of those who saw an increase in their state tax liability will now face an increase of more than 500 percent over their previous bill.
Forty-one percent of all respondents had not yet calculated their new tax bill.
"When the Texas Legislature convenes, this coalition will be there in force asking for relief from this burdensome tax," says Newton. "We expect that many lawmakers who voted for this tax without understanding the full impact it would have on the small business community will seek to amend it."
