The Facts
* Texas’ margin tax is complex, costly, and difficult to comply with, giving rise to a less competitive business climate in the state.
* The margin tax has consistently underperformed. Collections have fallen below expectations in most years since its inception, partially resulting from legal tax avoidance strategies, a common issue with complex tax schemes.
* Texas does not have a revenue problem. From the 2004-05 to the 2014-15 biennia, the state’s estimated total revenue growth is 71%, much faster than the 50% growth rate of population and inflation.
Recommendation
* Use the budget surplus to quickly buy down and eliminate the margin tax.