Last Wednesday, Texas Comptroller Susan Combs released a preliminary report on revenue estimates for the margins tax. In the short lifespan of the state’s new business tax, it has already cost taxpayers $4.2 billion and counting.
Having only received 133,000 payments, the Comptroller’s estimates excluded a portion of the 46,000 businesses who had filed an extension until at least August 15th and for those first time filers the extension can be until November 15. Once these extensions are included in the state’s final revenue estimate due out in November, all Texans will be surprised at just how much government is confiscating from the private sector.
Shocking a majority of small business owners and confusing an even greater number of CPA’s around the state, this insidious tax was originally promoted as a way to deliver much needed property tax relief. As it stands now, the margins tax has not only failed to bring meaningful tax relief to Texas property owners, but is costing many taxpayers a great deal more than their property tax bills ever did.
It is only a matter of time until this tax will be worked into the price of goods and services provided by the businesses paying the tax. Then all Texans will be shouldering the load for these taxes, as we know individuals ultimately pay all taxes. Businesses that cannot raise the prices of their goods and services quickly enough to cover this expense are faced with the prospect of going out of business.
In a recent report, the National Federation of Independent Businesses (NFIB) in Texas “said some businesses would see their taxes increase 200, 400, or even 1,000 percent.” No common sense argument possibly exists for a 10-fold tax increase. None.
Small businesses and entrepreneurs in the state – the same people responsible for the greatest net job creation – are already challenged with a hard-pressed national economy. Facing the prospect of slower economic growth, Texas government would do well to lighten the heavy burden on businesses.
– James Quintero