New Tax For Texas Businesses

Earlier today, a new tax went into effect in Texas, following a month-long period of waiting. The tax affects businesses in Texas. The tax will have retail and wholesale merchants to give 0.5% of their total profits to the state of Texas. All other types of businesses will have to give 1% of their total profits. However, businesses will still have a variety of deductions that they will be able to make from this tax.

The Texas state legislature agreed to this tax way back in 2006. The purpose of the tax was to reform the way public schools are funded in Texas. In the past, Texas public schools derived a majority of their funding from taxes on houses and land. Recently, however, the Texas Supreme Court deemed the use of property tax to finance public school to be in violation of the state constitution.

Approximately 300,000 businesses in Texas will have to pay the tax. This comprises one third of all the businesses in Texas. What about the other two thirds? Businesses with a single owner-proprietor don’t have to pay the tax. Businesses whose gross receipts come to under $300,000 a year, or businesses who would end up owing under $1,000 if they did pay the tax, are also exempt.

The deadline for paying the tax had initially been May 15th, a little over a month ago. However, there were so many questions and controversy surrounding the tax that there had to be a waiting period of a month.

Of course, in a traditionally business and free enterprise-favoring state such as Texas, the opposition to the tax is strong. Texas Senator Kay Bailey Hutchison criticized the way the tax targeted businesses. She expressed doubt that the tax would result in a corresponding decrease in property taxes.

Recent additions:

• US Bonds Doing Well in Wake of Economic Troubles
• Higher Incomes Hits By Credit Card Debt
• What Should You Do With Your Income Tax Refund?
• Dealing With Third Party Debt Collectors
• Budgeting - An Overlooked Key To Financial Success
• Taxing Misconceptions: Lies About Taxes