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Texas businesses taxed at a higher rate than most other states

Changes to Texas laws in 2007 are blamed by some for greatly increasing the tax burdens upon businesses.  Business owners are claiming that their taxes have gone up dramatically since the laws were implemented.

One owner of a family run company claims the business is required to pay more in taxes despite not making any profits.  Another Texas owner reported that the franchise taxes for his business went from $335 to $7,602. 

Texas businesses are said to have paid 61.5 percent of state and local taxes in 2012. This is significantly high as compared to other states that on average only have to pay 45.2 percent of taxes. The increases in taxes did not only take place in 2007. Businesses in Texas were required to pay 3.9 percent more in taxes in 2012 than what they paid in 2011.

While businesses may feel they are unfairly treated by Texas legislators, there does not appear to be any agreement on what should be done about it. Various tax bills claimed as remedies have been proposed, but none of these proposals have actually been signed into law.

With budgets becoming increasingly higher, there will always be a demand for new revenue. Yet the unintended consequences of every tax law are generally unknown until actually the new legislation is implemented.

All we can do as tax attorneys is to attempt to comprehend what is passed and then provide clients with their legal options. We can also guide businesses as to strategies to minimize tax liabilities. We will, however, continue making arguments to courts about whether requirements to pay particular taxes would or would not be fair.


Source: The Texas Tribune, "Businesses Bear Brunt of Texas Taxes, Study Finds," by Jody Serrano, July 18, 2013

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