The San Antonio Express-News reports that new National Federation of Independent Business radio ads assail the business tax that will take its first toll in May. The ads note some small businesses will see their tax burden rise by 1,000 percent over the current franchise tax.

The article provides several examples.  In San Antonio, Chuck Toudouze of Toudouze Market, a family-owned grocery wholesaler, said preliminary calculations show that his bill will rise from some $2,600 under the old franchise tax to closer to $7,700 for his high-volume, low-margin business. While Rep. Jim Keffer says in the article that the new burden will be offset by property tax cuts, Toudouze expects any property tax reduction to be minimal and temporary.

The article notes that Toudouze isn’t planning to fill positions if employees leave, and he won’t be able to pay Christmas bonuses this year.   “This kind of tax may put people out of business,” he said, but he’s determined that Toudouze Market will hang on. “We’re fighters.”

Eric Donaldson of Houston-based transportation broker Hot Shot Delivery and Hot Shot Logistics estimates that his business tax burden is skyrocketing from $3,000 to $5,000 annually to at least $28,000.

Rep. Jim Keffer complains in the article that NFIB “did not come and really try to work with us on any of this. Pretty much they were against the whole process.”  What business owner would want to help work with lawmakers to implement a tax that could force them to cut jobs and shut down their business.

As the budget surplus continues to grow with rising sales tax collections every month, state politicians have no excuse for not either getting rid of this tax altogether or passing some of the reforms that Rep. John Otto, who is quoted in the article, urges, such as providing that businesses who do not make a profit do not have to pay.  As it is, many businesses in their infancy may never make it to profitability due to this tax.

But ultimately, this entire tax should be eliminated.  Any tax should be fully transparent, but this tax is invisible as it either silently kills businesses and jobs in industries where prices can’t be raised or is passed on to consumers in higher costs for goods and services.  It also undermines Texas’ competitiveness with other states in competing for jobs – the best way to attract businesses and jobs is to minimize taxes on business.

 

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