AUSTIN – Today, the Tax Foundation released the 2017 State Business Tax Climate Index report that scores states based on their corporate income tax, individual income tax, sales tax, unemployment insurance, and property tax and ranks them accordingly. The report notes that although the Texas Legislature helped improve the state’s overall ranking by lowering the business franchise tax last session, the state’s ranking declined “due to a relative decline on property tax rank.” The Texas Public Policy Foundation’s Economist Dr. Vance Ginn and Director of the Center for Local Governance James Quintero issued the following statement:
“The stakes are too high for the future prosperity of Texans to not have the best economic environment possible. This is not currently the case as today’s Tax Foundation report shows that the overall business tax climate declined to 14th nationwide,” said Dr. Ginn. “The business franchise tax is a major impediment as it held the relative corporate income tax ranking to 2nd worst. Along with the Texas Public Policy Foundation’s research noting the large economic cost of the franchise tax, this low ranking provides further evidence that it should be eliminated to improve the state’s business tax climate so that Texans can achieve greater prosperity.”
“Texas’ business tax climate ranks 14th nationwide, showing that there’s plenty of room for improvement,” said Quintero. "To improve its standing and better protect taxpayers, the 85th Legislature should focus on making structural reforms. One such way is to give voters a stronger voice in the growth of property taxes by requiring an automatic election for any local government whose revenues increase above a certain limit in any one year. This will help check the rising tax burden and help keep Texas the envy of the nation.”
Vance Ginn, Ph.D. is an Economist in the Center for Fiscal Policy at the Texas Public Policy Foundation.
James Quintero is director of the Center for Local Governance at the Texas Public Policy Foundation.
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The Texas Public Policy Foundation is a non-profit, free-market research institute based in Austin, Texas.