Lawmakers consider lifting moratorium on margin tax
AMARILLO, TEXAS -- About 25,000 small businesses across Texas can expect to start paying their "margin tax" again after a two year moratorium.
In the last legislative session, lawmakers put a cap on the tax to help small businesses out.
It's only one percent of a company's profit margin, minus any operating expenses but with an $18 billion dollar shortfall, legislators are going to try and find every dime they can to go back to the state.
Back in 2009, legislators raised the ceiling on the margin tax from $300,000 to $1 million. Basically, businesses which generated revenue under that million dollar mark didn't have to pay that tax which is only 1% of their revenue, minus operating expenses, at a cost of $87 million to the state this year.
Facing an estimated $18 billion shortfall, that tax will drop from the million dollar mark to $600,000 dollars, which should increase revenue to the state by $68 million.
P.J. Pronger with Amarillo's Small Business Development Center, says taxes and services are inter-linked and lawmakers are going to have to find a way to close the gap.
"When you start trying to make up $18 billion, obviously, you're going to look in the easiest places first, they will look at the easy places, but they're still going to have a chunk of money to make up and they're going to have to make it up somewhere."
With the state already asking state agencies to decrease their budgets for the next couple years, this will be a quick way for lawmakers to recoup some of those losses.
"You pay taxes to get services and the two are tied together...so whether you come up with enough taxes to pay for the services or you get rid of some services...only two ways you can go," said Pronger.
Unless lawmkers act, the new cap of $600,000 will be enacted next year, affecting 25,000 businesses state wide. 40,000 Texas businesses fell under the million dollar cap exemption. Lawmakers do admit that keeping the exemption will be difficult to maintain at the next legislative session.
