| TO: | Honorable Jim Keffer, Chair, House Committee on Ways & Means |
| FROM: | John S. O'Brien, Director, Legislative Budget Board |
| IN RE: | HB1384 by Taylor (Relating to franchise tax rates.), As Introduced |
| Fiscal Year | Probable Net Positive/(Negative) Impact to General Revenue Related Funds |
|---|---|
| 2008 | $0 |
| 2009 | $0 |
| 2010 | $0 |
| 2011 | $0 |
| 2012 | $0 |
| Fiscal Year | Probable Revenue Gain/(Loss) from Property Tax Relief Fund 304 |
|---|---|
| 2008 | ($2,942,486,000) |
| 2009 | ($3,023,149,000) |
| 2010 | ($3,198,621,000) |
| 2011 | ($3,384,210,000) |
| 2012 | ($3,550,037,000) |
The bill would amend Chapter 171 of the Tax Code to reduce the franchise tax rates applied to taxable margin.
The tax rate for entities primarily engaged in wholesale or retail trade would be reduced to 0.25 percent from 0.5 percent. The tax rate for other taxable entities would be reduced to 0.5 percent from 1.0 percent.
The bill would take effect January 1, 2008, and it would apply to reports due on or after that date.
This estimate is based upon analyses provided by the Comptroller's Office.
The estimate is based on information from the Internal Revenue Service on total receipts, cost of goods sold, and compensation payments made by corporations and partnerships. The estimate takes into account the provisions of Chapter 171 relating to an exemption from tax for a taxable entity with liability under $1,000.
Note: HB 2, 79th Legislature, Third Called Session (2006) dedicates to the Property Tax Relief Fund 0304 all revenues collected under Chapter 171 in excess of the amount that would have been collected under the chapter as it existed on August 31, 2007. The fiscal impact table reflects that dedication. The General Revenue Fund will be obliged to compensate for the portion of property tax relief not funded by the revenues in the Property Tax Relief Fund.
| Source Agencies: | 304 Comptroller of Public Accounts
|
| LBB Staff: | JOB, CT, SD, SM
|