Today, the Texas House passed a $4.9 billion tax-cut package, which includes House Bill 31 and House Bill 32. HB 31 cuts the state’s sales tax rate from 6.25 percent to 5.95 percent and puts in place a mechanism to use funds to further cut the rate in the future at a potential savings to taxpayers of $2.31 billion. HB 32 lowers the business franchise tax rates by 25 percent, raises the cap to $20 million to file an EZ form at a lower rate, requests a study on full repeal of the margin tax, and puts in place mechanisms to eventually phase out the tax at an additional savings to taxpayers of $2.56 billion.
Texas Public Policy Foundation Director of the Center for Fiscal Policy Talmadge Heflin issued the following statement:
“Today’s House action of adopting legislation that cut sales and business taxes by a combined $4.9 billion provides further evidence that Texans will be the winner this session. Now the two chambers will need to resolve their tax cut package differences. However, as they work through the disagreements to reach a compromise, an alternative solution that would provide the largest economic boost for prosperity and job creation is repealing the costly franchise tax.”
The Honorable Talmadge Heflin, Director of the Center for Fiscal Policy at the Texas Public Policy Foundation. In the 78th Session, Heflin served as chairman of the House Committee on Appropriations and navigated a $10 billion state budget shortfall through targeted spending cuts that allowed Texans to avoid a tax increase.
The Texas Public Policy Foundation is a non-profit, free-market research institute based in Austin, Texas.