The Texas Conservative Coalition Research Institute (TCCRI) has released a study showing the economic benefit of repealing the margin tax. 

From the report:

“Repealing the franchise tax or halving the rates at which the tax is levied would have substantial economic benefits for the entire Texas economy. The Beacon Hill Institute at Suffolk University (BHI) has modeled the dynamic fiscal and economic effects of both of these policy proposals. Using 2013 as the baseline year for repeal, BHI’s economic model shows 31,500 net new jobs created across the entire Texas economy, as well as $3.2 billion in net new investment in the state, and $6 billion in new personal disposable income.  And while the state would forgo $3.9 billion of projected franchise tax revenues in 2013, this would be partially offset by dynamic revenue increases in other state tax collections, notably the sales and use tax ($133 million) and oil and gas severance taxes ($41 million).

By 2017, BHI projects that the economic gains accruing from repeal of the franchise tax will have increased significantly: 10,000 additional new jobs will be created (taking the total net new jobs to 41,500), while new net investment will rise to $3.4 billion, and new personal disposable income to $9.8 billion.”

While the federal government continues to balloon, Texas is in a position to show how small government policies can create a more vibrant economy by keeping more money in the hands of citizens and businesses alike. As evidenced by the TCCRI’s economic analysis, the best way to do this is to divert our focus from property and franchise taxes and instead move towards a more consumption-based system.  Consumers will buy based on what they can afford and not worry about losing in capital investment save for the natural risk in an unhindered market.

While other states like California continue down the treacherous path of higher taxation and becoming more and more dependent on Big Brother for assistance, Texas should continue to push forth policies of less is more. The next step is eliminating the margin tax.