Schwertners Small Business Tax Relief Act would set a $4 million exemption from the state franchise tax completely eliminating the tax for nearly half of Texas businesses
Texas Insider Report: AUSTIN TX -- Today Senator Charles Schwertner MD (R-Georgetown) filed SB 575 also known as the Small Business Tax Relief Act. If passed SB 575 would raise the total revenue exemption on the states business franchise tax from $1 million to $4 million providing substantial tax relief for tens of thousands of Texas businesses. In 2015 the Small Business Tax Relief Act received widespread bipartisan support in the Texas Senate before ultimately stalling in the House Committee on Ways and Means.
The Small Business Tax Relief Act represents a landmark tax cut for the kind of main street businesses that create jobs and drive the Texas economy forward said Schwertner. Texans have made it clear that they want to see pro-job pro-growth tax policies at all levels of government and for many small and medium-sized businesses struggling to make it the state franchise tax only serves to limit employment and stifle new investment.
The Texas Comptrollers Office estimates that by raising the current revenue exemption from $1 million to $4 million the Small Business Tax Relief Act (SB 575) would provide more than $238 million in annual tax relief and completely exempt over 62000 small businesses that would otherwise be subject to the tax. These small businesses represent roughly half (49.3) of all entities required to remit payment under the current franchise tax structure. Furthermore the Comptroller estimates this landmark tax relief can be achieved with only a 8.33 decrease in overall franchise tax revenue.
I think the entire legislature acknowledges this will be a challenging session from a budget-writing perspective Schwertner conceded. However if we are serious about making additional reductions to the franchise tax this session we should focus our efforts on ways we can provide substantial tax relief while still maintaining a balanced budget that addresses the needs of the state. By increasing the revenue exemption for the state franchise tax we can provide dramatic tax relief to the small businesses that need it most with only a modest impact to state revenues.
Small business advocates have consistently argued that the franchise tax disproportionately affects small to medium-sized Texas businesses -- particularly in those industries marked by high gross receipts but marginal overall profits.
Senate Bill 575 has again received broad support in the Texas Senate with 14 Senators agreeing to joint author the legislation with Senator Schwertner:
- Senator Brian Birdwell (R-Granbury)
- Senator Dawn Buckingham (R-Lakeway)
- Senator Konni Burton (R-Colleyville)
- Senator Donna Campbell (R-New Braunfels)
- Senator Brandon Creighton (R-Conroe)
- Senator Craig Estes (R-Wichita Falls)
- Senator Bob Hall (R-Canton)
- Senator Juan Chuy Hinojosa (D-McAllen)
- Senator Lois Kolkhorst (R-Brenham)
- Senator Eddie Lucio Jr. (D-Brownsville)
- Senator Robert Nichols (R-Jacksonville)
- Senator Charles Perry (R-Lubbock)
- Senator Kel Seliger (R-Amarillo)
- Senator Larry Taylor (R-Friendswood)
A medical doctor by training Dr. Schwertner currently serves as Chairman of the Senate Committee on Health and Human Services. Schwertner is currently serving his second term as the senator for Senate District 5 a ten-county region of central and east Texas.
