Governor Rick Perry Endorses Business Tax Cuts - How Would That Impact You?
It’s always interesting to watch tax debates unfold, and speculate whether it’s a political knee-jerk reaction at its core, or whether the proponents actually want to see changes to the tax code. A few weeks ago, Texas Governor Rick Perry made a brief splash in news headlines for endorsing broader business tax cuts for this session. The governor had called for “tax relief” at the start of the legislative session in January, but he reiterated his request and called for a $1.8 billion tax cut over two years. How would this plan impact your business?
Governor Perry’s Tax Cut Plan
In his proposal, Governor Perry outlined a plan that would affect about 100,000 large and small businesses across the state. The tax cut would come in several forms, including reducing the business franchise tax rate by 5 percent, providing a $1 million deduction for businesses posting a revenue up to $20 million, offering a one-time deduction for companies moving to Texas, and offering a reduced rate for businesses that file using an electronic system.
Governor Perry cited his desire to be more competitive with neighboring states that are offering tax benefits to businesses. He proposed that this tax cut could be funded by the state’s general revenue fund, or possibly the rainy-day fund.
Tax cuts involve a delicate dance of balance of power. Cuts on this scale may mean reduced income for Texas government, but could entice more businesses to the state, generating revenue, providing employment options and boosting the Texas economy. Cuts like this can also provide existing Texas businesses with a chance to grow.
Unfortunately, Governor Perry’s proposal is just that - a proposal. A major tax bill has been working its way through legislature, but some businesses say it’s not enough. Others are pushing for the bill so that something - anything - gets through this session, with the belief that some tax cut reduction is better than none, even if it’s not optimal.
Over the last few days bills have passed both the Texas House and Senate to provide a portion of the relief mentioned above. If you'd like to know more about how these tax cuts will affect your business or if there's something the legislature could have done to benefit your industry then please contact The Posey Law Firm, PC to learn more.
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