Texas-Sized Tax Cut: Governor Abbott Signs Total Relief Tax Package Of $3.8 Billion
by Travis Brown
When a state success story is as big as Texas’ is, the good news needs sharing beyond the immediate borders. When an already business-friendly state becomes even more hospitable to growth and innovation, that message needs to go worldwide.
That’s exactly what Texas Governor Greg Abbott plans to do in the coming months. Already playing from a position of strength, the governor shored up Texas’ positive reputation even further this week, by securing a new business tax cut. In the legislative session that ended in Austin last week, legislators approved a 25 percent reduction in the state business franchise tax.
Of course, this newly approved cut is not the only economic enticement luring new businesses to Texas. The Lone Star State levies no personal income tax and no corporate income tax. Additionally, the franchise (or “margins”) tax will be cut by $2.56 billion over the next two years, according to Governor Abbott. Texas is also making new investments in roads and education.
In a legislative-session recap for reporters, the Governor told reporters, “When you consider what we achieved during this session, as well as the challenges other states are facing, I think we have a tremendous opportunity to capitalize on our current position.”
Beginning in July, Abbott will begin a series of strategic trips around the United States and abroad, with the goal of closing economic development deals with corporate leaders. Rather than stick Texas taxpayers with the bill, Abbott will pay for the travel with money from the nonprofit TexasOne, a group that his gubernatorial predecessor (and now 2016 presidential hopeful) Rick Perry helped create.
“We’re not going to go wandering around, just hoping that we find gold,” Abbott said. Instead, the governor will visit states and countries in which there is a known business opportunity upon which Texas can capitalize.
While Governor Perry conducted similar outreach during his tenure, Abbott is taking the recruitment effort a step further by enticing the best and brightest academic minds from other universities to come work at higher-education institutions in Texas. The hope is that Nobel laureates and other top scholars will bring their ideas and innovations to Texas, effectively creating a stimulus for the “ideas economy” as well.
With a state business tax climate that already ranks in the top-ten (per the Tax Foundation’s 2015 rankings), Texas can parlay current success into future growth. In addition to the 25 percent cut in the state business tax, the Texas legislature signed off on a higher homestead exemption from school property taxes. The total tax-relief package amounts to $3.8 billion over two years.
The great American job race is led by Texas and Florida. With recent jobs numbers showing Florida outpacing the Lone Star State by a nose, this business tax cut might help Texas retake the lead with major corporations. Plus, as other highly populous states, such as New York and California, buckle under the weight of burdensome tax structures, Texas’ “Open for Business” sign just keeps shining bright. Now is the perfect time for Governor Abbott to share that message with the nation – and the world.