LEGISLATIVE BUDGET BOARD
Austin, Texas
 
FISCAL NOTE, 81ST LEGISLATIVE REGULAR SESSION
 
April 19, 2009

TO:
Honorable Rene Oliveira, Chair, House Committee on Ways & Means
 
FROM:
John S. O'Brien, Director, Legislative Budget Board
 
IN RE:
HB4266 by Howard, Charlie (Relating to the computation of taxable margin for purposes of the franchise tax by tier partnerships.), As Introduced



The bill will have a direct impact of a revenue loss to the Property Tax Relief Fund of $20,450,000 for the 2010-11 biennium.  Any loss to the Property Tax Relief Fund will have to be made up with General Revenue of the same amount to fund property tax relief.



Fiscal Year Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2010 $0
2011 $0
2012 $0
2013 $0
2014 $0




Fiscal Year Probable Revenue Gain/(Loss) from
Property Tax Relief Fund
304
2010 ($10,099,000)
2011 ($10,351,000)
2012 ($10,713,000)
2013 ($11,142,000)
2014 ($11,588,000)

Fiscal Analysis

The bill would amend Chapter 171 of the Tax Code, regarding the franchise tax, by adding language to the section of the Code dealing with tier partnerships.

Under current law an upper tier entity could include in its tax calculation the total revenue of a lower tier entity, if the lower tier entity submits a report to the Comptroller showing the amount of total revenue each upper tier entity that owns it should include in the upper tier entity's tax report. The bill would add the related cost of goods sold or compensation to the items reported by the lower tier entity to the upper tier entities and to the Comptroller.

The bill would take effect on January 1, 2010, and apply to a report due on or after that date.


Methodology

The bill would provide upper tier entities subtractions for compensation or cost of goods sold that are not available under current law. The estimated fiscal impact is based on data in the Comptroller's franchise tax files on tier partnerships' revenue, taxable margin, cost of goods sold, and compensation.

Local Government Impact

No fiscal implication to units of local government is anticipated.


Source Agencies:
304 Comptroller of Public Accounts
LBB Staff:
JOB, MN, SD, SM