AUSTIN – The National Federation of Independent Business, Texas’ leading small-business advocacy group, is reminding small-business owners that the new Texas margins tax will be collected in just four months.
“In our travels across Texas, we’re still finding many small-business owners are either unaware of the new tax or are not prepared to pay it,” said Will Newton, NFIB/Texas executive director. “This new tax will prove increasingly burdensome on smaller businesses, and we want to make sure they know what’s coming.
“The next four months are critical for small-business owners who still may not understand how this tax will affect their business,” Newton said. “We encourage all small-business owners to start talking to their accounting and finance experts soon so that they aren’t caught off guard this May.”
NFIB/Texas is calling for a handful of reforms that will significantly affect the impact of this burdensome tax on the small-business owner, including an exemption from the tax for small businesses that are marginally profitable or not profitable and any businesses whose gross receipts total less than $1 million.
Several lawmakers have come forward recently, expressing concern over how the new margins tax is going to be collected, according to NFIB/Texas, noting a recent letter sent to the state comptroller by lawmakers, who indicated the Texas margins tax was not the way to fix the school finance crisis.
“None of us … believe that the tax is a viable, long-term solution to the school finance dilemma while also having the potential to adversely impact the economic climate in Texas,” read the letter, which was signed by 30 state representatives.
Newton said the letter validates the position held by NFIB/Texas, which views the tax as harmful to small businesses and has called for drastic reforms to the new tax.
“While the sentiment from lawmakers is welcome, it will not help the countless small businesses that will be affected this May when they have to write the state of Texas a check they simply can’t afford to write,” he said.
One Austin-based business owner said the tax is unfair to those who have been paying the state’s old franchise tax for years.
Kurt Summers, who owns Austin Generator Service, said, “The gross receipts tax structure, as currently written, places the lion’s share of the business tax burden directly on the backs of Texas small-business owners.
“Not only does this new tax do nothing to relieve the burden for us, it makes things harder on those who have been playing by the rules, paying the taxes, and creating jobs,” Summers said.
“It is the state’s duty to ensure that all businesses are taxed fairly and bear an equal burden,” Newton said.
“Too much of the current franchise tax load is now being borne by the state’s small and independent businesses.”
Another NFIB/Texas recommendation addresses limiting the tax liability of all businesses under $20 million in gross to no more than a 100 percent increase over their tax liability from the previous year.
The small-business advocacy association ramped up a statewide awareness campaign this fall with radio and newspaper ads in Texas’ major cities. It plans to continue its advertising campaign throughout 2008.
NFIB is a small-business advocacy association, with offices in Washington, D.C., and all 50 state capitals. It was founded in 1943 as a nonprofit, nonpartisan organization to small- and independent-business owners a voice in shaping public policy issues.