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Government Relations
property tax relief is critical to the state
of Texas:
. . . . .
“Let there be no misunderstanding, I
agree with Governor Abbott that I too
will not support any budget that does
not have franchise tax relief. I also will
not support any budget that does not
have property tax relief, as well.”
Lt. Governor Dan Patrick,
Press Statement April 15, 2015
. . . . .
Chairman Bonnen defended the sales tax
cuts in a statement clarifying the House’s
intent to offer “tangible tax relief that will
benefit families and businesses of all sizes
every time they buy something.”
The tax debate between the House and the
Senate affects the most significant bill of
the session: the budget bill. The budget bill
is the only must-pass bill of each session,
as lawmakers have a constitutional duty to
approve it. There are many aspects of the
budget that both chambers agree upon,
such as funding border security, finding
more money for public education, and the
general need for some tax relief; however,
the tax relief debate is holding up the
budget’s progression to the Governor’s desk
for final approval.
With press statements being issued from
both chambers, people were looking to
the Governor for clarification. Governor
Abbott strategically avoided jumping in
the debate, instead offering statements that
emphasize his focus on business franchise
tax relief. On April 15, national tax due
date, Abbott indicated that he was open to
considering either tax relief package.
Will Governor Abbott summon the
legislature into a special session this summer
if the House and Senate don’t work out a
compromise on the two varying tax relief
plans? After all, he made a specific claim
to veto any budget that doesn’t include tax
relief. It appears this will be the case if both
chambers are unable to agree on what form
tax relief will take before the legislative
session adjourns on June 1.
With time diminishing, the House and
Senate will be forced to work out a
solution to appease Texas’ new governor
and to avoid spending tax dollars to go
into a special session this summer. An
option of compromise, that may or may
not be feasible, is a scaled down version
of property tax relief and sales tax cuts,
alongside a franchise tax reduction.
The Texas Association of Builders
supports both the House and the Senate
tax relief packages proposed because both
benefit TAB’s nearly 10,000 residential
builder, developer, remodeler, and
associate members and ultimately would
result in reduced housing costs. We will
continue to work with the leadership in
both chambers on a solution to the tax
relief question.
This article was written before the end of
session and is current at the time of printing.
Justin MacDonald currently serves as the
volunteer chair of TAB’s Government
Relations Committee. Justin is the
President of MacDonald Companies, a
diverse development, construction, and
management enterprise that has more than
35 multi- and single-family neighborhoods
completed throughout Texas.
House Tax Relief Plan
:
$4.9 Billion in Cuts
• Lowers the rate of the state sales tax by
0.3% points (from 6.25% to 5.95%)
• Lowers the standard franchise tax
rates by 25% (to 0.375% for retailers/
wholesalers and 0.75% for all others)
• Reduces the rate of the EZ tax alternative
calculation for small businesses (a simple tax
on Texas receipts with no deductions) from
0.575% for businesses with less than $10 M
in total revenues to 0.331% for businesses
with less than $20 M in total revenues
PROS
• Leads to a $1.7 billion increase in personal
income over the next five years
• Lowering the sales tax rate will save a
family of 4 will save $172 per year
• Employers (who pay 40% of all sales
taxes) will realize a savings
• Retains current exemptions that
allow 900,000 small businesses
to pay no franchise tax
• Doesn’t apply against the
state’s spending limit
