Texas… or, Taxes?

According to the Small Business & Entrepreneurship Council’s (SBE) Business Tax Index, the State of Texas ranks extremely well in terms of being friendly to small business. In data collected for a recent study, the SBE ranks Texas as the 5th best state tax system, which measures 16 different areas of taxation ranging from personal income tax rates to consumption-based tax rates to gas taxes to unemployment tax rates.

Sadly, the state’s ranking could be jeopardized by the legislature’s consideration of a new job tax. After passing through the Texas Senate, HB 2623 is currently out of a House committee and could be voted on in the next several days. The bill, relating to accepting $556 million dollars from the Obama Administration in exchange for a permanent job tax could mean costing employers hundreds of millions of dollars once the stimulus money runs out. That means Texas businesses will have to pick up the tab for this program.

Specifically, the program – originating from Washington – would mean a radical expansion of unemployment benefits, including now giving benefits to part-time labor. The stimulus funds do not appear to remedy the current problems related to an estimated $153 million dollars in fraud and overpayments made each year. Instead, the funds promote a shift in the State’s business focus from those who create jobs, to the employee, potentially damaging a well-earned reputation for being business-friendly (in 2008, Texas created 70% of all jobs in the U.S.). Publicly, this is a sticky situation as it could lead to the assumption that if you support the employer then you are against the employee. Texas indeed boasts a strong and proud workforce who provides the manpower to make Texas businesses highly productive. However, most would agree that their work ethic is at least an indirect result of the good jobs and work environment already in place by the businesses who created them. A new tax could weave a dangerous web of change in the Texas business community, so it is no wonder Governor Rick Perry has been adamantly opposed to receiving ‘strings-attached’ funding from the federal government.
The Texarkana Chamber will be closely tracking this bill to make sure businesses are protected. Stay tuned for updates as well a report on the Arkansas-side tax system.

That’s my view. What is yours? I would love to hear from you.

Jeff K. Sandford, IOM
President & CEO