Phasing-Out The Burdensome Margins Tax
Watch out video about phasing-out the burdensome margins tax!
I am strongly opposed to the costly and complicated margins tax on Texas businesses, which removes about $4.5 billion each year from the state's private sector economy. The tax discourages job creation, savings, investment, and other economic activity. Based on dynamic economic analyses performed by well-respected and nationally-renowned policy experts, researchers, and economists, Texas stands to gain up to 129,200 new jobs if we eliminate the margins tax. The Tax Foundation, a nonpartisan think tank that studies tax policy, ranks Texas 10th overall among the states with regard to our business tax climate. They estimate that if we repealed the margins tax, we would jump to third place.
The margins tax imposes less obvious costs, too. It contains different rates for different kinds of business, several different formulas to calculate liability, and numerous credits and exemptions. This kind of tax complexity is always a government-imposed disadvantage on small businesses, which cannot afford the lawyers and accountants needed to effectively navigate the margins tax law.
I am pleased that the Legislature has taken action in House Bill 32 to cut the margins tax by 25% across the board. I voted for the bill, and tried to strengthen it with an amendment that would have cut the tax by 15% every two years until it was totally eliminated. Though that effort was ultimately unsuccessful, I am undeterred from the cause of phasing-out the margins tax. It will be among my top priorities next session. I am totally dedicated to putting the margins tax on a path to full repeal.
Based on my conversations with local business leaders in Dallas County, I am convinced that this particular revenue source is overly burdensome on job creators. Phasing it out will create many tens of thousands of new jobs and lead to higher wages, savings, and investment for Texans. I was proud to be a part of the efforts in the Legislature to significantly cut the margins tax, and I hope you will join me this year and next as I work to lay the foundation to phase-out the margins tax once and for all.