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Perry: Increase business tax exemption for small business
Gov. Rick Perry called for exempting more small businesses from the revised franchise tax approved in 2006.
“Our guiding priority must be shrinking, not expanding, the burden on small businesses that are the backbone of our economy,” Perry said in his State of the State address Tuesday.
Perry said businesses with less than $1 million in taxable revenue should not pay the tax. Currently, the threshold for a total exemption is $300,000 while those with revenues of less than $900,000 pay less than 1 percent tax rate paid by other businesses subject to the tax.
The Texas chapter of the National Federation of Independent Business quickly sent a release welcoming Perry’s recommendation.
“An increase in the exemption will send the message that businesses, start-up companies and aspiring entrepreneurs will not be harmed by state government while they are small and struggling to grow their business,” said Will Newton, NFIB/Texas executive director.
The tax is an integral part of the 2006 tax swap that reduced school property taxes. Lawmakers might be reluctant to make significant changes to the business since it brought in $4.5 billion in its first year, $1.4 billion less than $5.9 billion projected expected.
But expanding the small business exemption to those with less than $1 million would have a relatively small impact on the total amount brought in by the tax while providing relief to a lot of taxpayers.
In the first year of the revised tax, businesses with less than $1 million in revenue paid just $82.7 million — 2 percent of the total — yet they constituted almost 80 percent of the taxpayers, according to an analysis by the Texas Comptroller.
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By Texas Conservative
January 27, 2009 12:26 PM | Link to this
Great idea. It’s definitely time to raise the exemption. We need to be easing the tax burden on our small businesses…