HB 800

83(R) - 2013
Economic & Small Business Development

Vote Recommendation

  • Positive
  • Neutral
  • Neutral
  • Positive
  • Neutral


Jim Murphy

Bill Caption

Relating to a sales and use tax exemption and a franchise tax credit related to certain research and development activities.

Fiscal Notes

Estimated Two-year Net Impact to General Revenue Related Funds for HB800: a negative impact of ($221,156,000) through the biennium ending August 31, 2015. Additionally, the bill will have a direct impact of a revenue loss to the Property Tax Relief Fund of ($18,000,000) for the 2014-15 biennium. Any loss to the Property Tax Relief Fund must be made up with an equal amount of General Revenue to fund the Foundation School Program. There would be a corresponding loss of sales and use tax revenue to local taxing jurisdictions.

Bill Analysis

Summary: HB 800 seeks to change the current law by allowing businesses that are involved in research and development to either receive a franchise tax credit or receive a sales exemption on software and equipment purchased for the purpose of research and development initiatives. The Comptroller's Office will oversee the credits and exemptions to ensure they function as statutorily intended. The purpose of HB 800 is to incentivize the private industry's involvement in research and development in order for this industry to grow in Texas.

Analysis: We support comprehensive tax reform that is visible, broad-based, and low. HB 800 moves in the right direction by removing the tax burden for businesses by providing a tax credit. The fact that there are so many exemptions in existing tax code and in proposed legislation speaks volumes about the unnecessarily complicated tax structure. This legislation helps alleviate the problem by limiting government's scope by at least relieving the tax burden on businesses that support research and development.

The state should work towards eliminating the franchise tax and removing regulatory burdens that inhibit the free market from thriving. As a result, by removing the franchise tax, this would treat all industries fairly while incentivizing businesses to operate in Texas. We encourage legislators to support HB 800 and work towards comprehensive reform.