July 17 , 2008

New Margins Tax is Working for Texas

Austin, TX – It is time to set the record straight about the attitude of the manufacturing community regarding the Texas Margins Tax and the resulting one third reduction in school property tax rates, according to the Texas Association of Manufacturers (TAM).

“Overall, the reformed margins tax plan provided an annual tax cut in excess of $1 billion in property tax reductions for businesses and individuals,” said Tony Bennett, chairman of TAM.

During passage of these measures, the business community reached near unanimity in support of the tax reform plan and we continue to support it today. Certainly there was opposition from some businesses and professional service firms who had never paid any tax or had used legitimate tax planning strategies to pay minimal taxes to fund our schools. However, the vast majority of the Texas business community supports the reforms and believes the revised business tax is working.

“For the first time in Texas, the vast majority of business pays a fair tax – tax policy the Legislature felt needed to be addressed,” said Bennett.

According to Bennett, alternatives to the Margins Tax are simply not viable. Texas is not going to – and shouldn’t - repeal the constitutional prohibition on a state income tax. Texas would be reckless to increase its sales tax to 9 or 10 percent, forcing families to pay taxes on items like groceries, medicine, water, electricity and natural gas. An expanded sales tax could encompass services such as hair cuts, child care, medical, and even nursing home care. The list goes on and on.

Hiking the Texas sales tax would devastate Texas’ competitive edge and siphon family budgets. What responsible official would espouse this alternative? The tax reform plan and its central element, the Margins Tax, was supported by the business community because it is the only viable option for Texas.

TAM represents more than 250 manufacturers across the state of Texas. From paper and consumer goods to automobiles and snack foods, the members of TAM span the realm of manufacturing in Texas.

Contact: Gretchen Fox, 512-694-4326