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Franchise Tax Bill Gains Final Approval From Texas House

Update (2:51 p.m on May 8, 2013): The full Texas House has passed the measure, 117 to 24, after a final vote on Wednesday, May 8, 2013.


Republican State Rep. Harvey Hilderbran, R-Kerrville, says his measure – House Bill 500 – is aimed at helping what he calls the state’s “mom and pop” businesses. The ones, he says, that are the most entrepreneurial and create most of the jobs in Texas.

"If you don’t do the things to give relief to those folks who are treated the most unfair under the provisions of the margins franchise tax, then you have people who quit investing, quit opening businesses and even close the businesses they have," Rep. Hilderbran said.

Rep. Hilderbran’s original bill cut roughly $400 million from the state’s franchise tax. It would also extend the exemption for businesses with revenue of less than a million dollars, among other provisions. During debate, millions of dollars in additional tax cuts were added by lawmakers focusing on key industries in their districts.

Back in 2006, the Legislature voted to stop taxing businesses based on their profits. Instead, they’re taxed on their gross receipts even if they don’t make a profit, which Laura Hoke with the National Federation of Independent Businesses is against. She says this measure is a good start but the federation wants the tax gone completely.

"…Allowing the business owners to take that money and invest in jobs, health care, in people, in technologies, in inventory," Hoke said. "Let them breathe. Let them put that money back into the economy."

On the House floor Tuesday, things got heated when State Rep. Sylvester Turner, D-Houston, objected to how the tax cuts would be paid for: out of a fund that goes directly to public schools.

"But there’s no other vehicle to add any money to make up for what’s taking place in HB 500, Representative Hilderbran," Rep. Turner said.

But Rep. Hilderbran said a Senate bill -- SB 1 -- would put money back into schools.

"If you don’t like HB 500, Sylvester, vote against it," Rep. Hilderbran said. "Let me tell you: I’m going to vote for small business tax cuts and I’m going to help your small businesses and your automotive repair shops and all the businesses that get relief in this bill."

And after several hours, most members agreed with him. They voted preliminarily to pass it, 112 to 27. Upon final passage, expected today, it will go on to the Senate. 

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