Failure of Texas’ Business Margin Tax

Basic economics explains that taxes on businesses are simply passed onto taxpayers in the form of higher prices, lower wages, and fewer jobs. In other words, businesses do not pay taxes; taxpayers do. This has been at the heart of the discussion about the business tax in Texas known technically as the franchise tax but commonly called the “margin tax.” The margin tax has failed to be a simple form of taxation and has failed to allow businesses to reach their full potential. Problems generated by the margin tax are so costly that it fails as good public policy and should be phased out and ultimately eliminated.

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