The Texas Senate rushed out tax-cut bills Tuesday night as lawmakers tried to ready for next week’s adjournment.
The battle over taxes is far from over.
The Senate’s version of House Bill 500 gives businesses with less than $1 million in gross receipts a permanent exemption from paying the franchise tax, commonly called the margins tax. It also gives all businesses _ regardless of size _ a five percent rate cut for the next two years.
Sen. Glenn Hegar, R-Katy, said the Senate version would help 143,000 small businesses and treat all business equitably.
“I think meaningful tax relief should apply to all,” Hegar said.
The Senate rejected an attempt by Sen. Dan Patrick, R-Houston, to replace the across-the-board rate cut with a tax exemption for small businesses making less than $2 million in gross receipts.
Patrick argued that temporarily cutting the tax rate by 5 percent would have minimal impact and that raising the floor for a tax exemption focuses on small businesses that are creating jobs.
“I think we get more bang for the buck,” he said.
The Senate rejected the idea because some lawmakers were wary of the cost.
That doesn’t bode well for Gov. Rick Perry’s call for $1.6 billion in franchise tax cuts. Last month he called for giving a tax break to businesses making less than $20 million in gross receipts.
The House version also gave small businesses a permanent exemption, but it also targeted several industries for tax cuts in a much more complicated bill.
But its author, state Rep. Harvey Hilderbran, R-Kerrville, argued that his bill gives long-lasting tax relief and corrects some of the inequities in the law.
Both chambers must work out the differences before the Legislature adjourns Memorial Day.
Without debate, the Senate also passed House Bill 800 which gives either a sales tax or franchise tax break to companies that invest in research and development.
Texas is one of seven states that doesn’t provide a R&D tax credit.
In other action, the Senate passed House Bill 1133 creating a new sales tax exemption to encourage investments in cable TV, Internet access, and telecommunications services at a cost of $100 million each biennium.