Texas Lt. Governor David Dewhurst and Speaker of the Texas House of Representatives Joe Straus each announced legislative issues that will be studied by senate and house committees during 2010, leading up to the next Texas legislative session in 2011. The results of these studies (such as property taxes, franchise taxes and tax credits) may ultimately be filed as bills during the legislative session.
These studies provide a great opportunity for you to become involved in the Texas legislative process by weighing in on issues that impact your industry and how you do business in Texas. Changes in state law could result in a more friendly business environment for your industry or create hurdles that could increase the costs of doing business in the state.
The interim studies will include public hearings, during which opportunities exist to educate legislators and staff on the relevant topics. The studies also lead to the generation of written reports that are circulated to all members of the legislature. Thus, opportunities exist for your position on an issue to be included in – or excluded from – the results of a legislative study.
Corporate and Tax Issues of Key Importance
As provided by Lt. Governor Dewhurst and Speaker Straus, the following is the list of study topics that are likely to be important to your industry:
- Review the effect that Texas business tax credits, such as a research and development credit, have on economic development in Texas. Determine whether the costs of various tax credits would be adequately offset by the net increase in state sales tax, other revenues and jobs produced by each credit. Focus on businesses relocating to or from the State of Texas and, the impact on the tax base, employment and the overall economic condition of the state. Senate Committee on Finance.
- Monitor the revised franchise tax and identify changes to simplify the tax and improve compliance and fairness. House Committee on Ways and Means.
- Examine the state's major tax exemptions to determine how the current costs and benefits compare with the original legislative objectives. Make recommendations for adjustments as needed. House Committee on Ways and Means.
- Identify and evaluate potential improvements to the property tax system. Consider and make recommendations relating to the following:
- Methods to increase public participation in the tax rate-setting process and ensure fairness in appraisal protests and appeals;
- Requirement that property appraisal values may not increase by more than inflation and/or population growth, or another amount to be determined by local taxing authorities, with a maximum cap of 10 percent;
- Exemptions provided to community housing development organizations to determine if changes are needed to ensure that the public benefits outweigh the revenue loss;
- Methods and procedures for determining a real property interest in oil or gas in place, as contained in Texas Tax Code Section 23.175, including how market-based data and market-based methodology possibly could be used to ensure fair, reliable, and equitable price forecasts of oil and gas interests. Analyze the need for the creation of an Oil and Gas Valuation Advisory Committee to assist in forecasting current calendar year statewide average prices for oil and gas; and
- The constitutional constraints and fiscal implications of exempting real property, leased to a school, as defined by Section 11.21 of the Tax Code, from ad valorem taxation. Senate Committee on Finance.
- Study and report on third-party liability issues involving workers' compensation, including the frequency and success rates of third-party litigation, the relationship (if any) between third-party litigation and jobsite safety, the adequacy of compensation and reimbursement to workers, and the economic cost of third-party litigation and equitable and contractual subrogation in construction activities. Joint Interim Charge with House Committee on Judiciary and Civil Jurisprudence and House Committee on Business & Industry.
- Review the Unemployment Compensation Fund and its impact on business taxpayers to determine whether changes may be made to stabilize the fund in times of economic contraction without imposing an undue economic burden on businesses. Determine whether modernizations should be implemented to make the fund more efficient and effective. Joint Interim Charge with House Committee on Technology, Economic Development and Workforce, and House Committee on Business & Industry.
- Study and make recommendations regarding the use of arbitration in Texas and the effect such practices have on state jurisprudence. House Committee on Judiciary and Civil Jurisprudence.
- Identify promising technologies being developed that could establish Texas as a leader in emerging industries. Examine the adequacy and focus of research in these areas and the state's efforts to commercialize proven technologies. House Committee on Technology, Economic Development and Workforce.
- Study the tax structure as applied to cable versus satellite service to determine if any unfair competition results from state tax policies. House Committee on Ways and Means.
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