Dear Franchise Tax

May 15, 2015

Franchise Tax, President of Economic Lackluster and Small Business Nightmares

Texas State Capitol

1100 Congress Avenue

Austin, TX 78701

Dear Franchise Tax,

I write to you today, not only because it is your day for me to file on you, but because I have not yet had a chance to express what you have done for my business and the Texas economy. Having to comply with you since 2007 has not only been onerous, it has been downright complicated. My cost to comply with you can cost as much or more than what I submit to the state of Texas and you don’t care if I have been running my business at a loss or profit (not even the IRS does that to me).

In the years when my small business was exempt from you, Franchise Tax, I still had to comply. When I thought I had complied with all of the federal, state, county, and city regulations and taxes, and still had not brought in revenue, you were happy to penalize me with a late filing fee for not submitting one of the many forms I did submit. Oh how I loved spending those hours on the phone with the Comptroller’s office just to discuss you and that one missing form, after all, time isn’t money, right? 

Perhaps one of the more interesting aspects about you, is that you were passed in the Texas Legislature in hopes of creating an additional revenue stream to serve to reduce school district related property taxes. Unfortunately, you have fallen short of all of your promises by $2 billion every biennium, leaving tax revenues short, even after I have paid for you with my hard-earned money and can barely take profit home myself.

Just because you are based on gross receipts and volume of business being done without taking into account whether my business profits or not, I am not bitter, no. Even though 57 percent of my small business friends said they paid the franchise tax even when they did not make a profit in a 2013 survey, I am still not disheartened. While I have to pay you and a pyramid of taxation including inventory, property, income, sales tax, and annual registrations and certifications, I hold hope. You see, I am determined—Franchise Tax—because that is what it takes to be a small business and the economic backbone of Texas’ economy accounting for 96 percent of all businesses and creating two out of three new jobs annually. 

You see, Franchise Tax, the 84th Legislative Session is going to take care of you—hopefully, once and for all. The House and Senate are tired of you not performing like you should and instead being a constant burr in my saddle. They have come to realize that there is a budget surplus and that while business owners are happy to pay for their fair share of taxes you—Franchise Tax—are a broken system. In phasing you out, Texas-owned business will be able to funnel funds into job creation (estimated to be around 41,500), capital improvements, employee pay raises, and debt payoff, which all serve to boost the economy. Your time has come, Franchise Tax, it’s time for the little dogs to eat and for Texas to get their billions back.

Yours Truly,