Other Voices

Scrapping the margins tax would benefit all

The fact that people in Austin are engaged in a robust conversation on billions of dollars of tax relief is a testament to the tremendous leadership of our Texas Legislature, especially Gov. Greg Abbott, Lt. Gov. Dan Patrick and Speaker Joe Straus.

I'm particularly proud of our lieutenant governor, and I look forward to working with him on a long-ranging property tax cut that will include reforms that allow us to buck the trend of such cuts being negated by local tax hikes and appraisal creep.

However, my goal, which is shared by many other legislators, is to eliminate the Texas franchise tax, also known as the margins tax.

That goal is also shared by Texas Republican primary voters, 88 percent of whom voted in a 2014 ballot proposition to abolish the tax. This session, we have the opportunity to cut the margins tax rates by 50 percent with a phase-out. That is where we should focus our efforts for the remainder of this session, which ends June 1.

The Senate and House should shelve their respective property tax and sales tax proposals in favor of a 50 percent margins tax rate cut, which will create jobs, propel our economy to even greater heights and keep Texas the envy of the nation.

The House and Senate budgets open the door to immediately cutting the margins tax in half. Both chambers authorized across-the-board relief from the margins tax in their proposals.

By moving away from the other proposals, we can cut the margins tax by 50 percent, which will accelerate the Texas economy, create jobs and boost investment. Going forward, we must eliminate the margins tax completely.

A 50 percent rate cut with a defined path to elimination will have far-reaching economic benefits that will exceed the benefits of cutting either property taxes or the sales tax.

The Tax Foundation, a nonpartisan think tank that studies fiscal 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 They estimate that if we repealed the margins tax, we would jump to third place.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 Tax Foundation has also called for abolition of the margins tax:

“Repealing the Margin Tax is the most straightforward option for improving Texas’ tax structure,” the foundation said. “As one academic put it, gross receipts taxes like the Margin Tax ‘do not belong in any program of tax reform.’”

Based on dynamic economic analyses performed by the Texas Public Policy Foundation, the Beacon Hill Institute and other researchers, Texas stands to gain between 41,500 and 129,200 new jobs.

We can begin to seize on these remarkable economic benefits by making a major 50 percent cut to the margins tax rate and requiring a phase-out to eliminate the tax.

If we shift our focus from sales and property tax cuts, we could slash the margins tax rate more dramatically across the board and take a major leap toward eliminating the tax.

This would significantly increase investment, savings and employment expansion. Those are benefits that Texans will actually feel and that no local government can chip away.

This is a solution that should unite state leaders, no matter the office or chamber in which they serve.

The elimination of the margins tax is bigger than either the Senate or the House. It benefits all Texans, which is why we convene in Austin for 140 days every two years.

State Sen. Don Huffines, R-Dallas, represents Senate District 16, which includes a portion of Dallas County.