SB 1031

85(R) - 2017
Senate Finance
Senate Finance

Vote Recommendation

  • Neutral
  • Neutral
  • Neutral
  • Negative
  • Negative


Larry Taylor

Bill Caption

Relating to a deduction under the franchise tax for certain contracts with the federal government.

Fiscal Notes

Estimated Two-year Net Impact to General Revenue Related Funds for SB1031, Committee Report 1st House, Substituted: an impact of $0 through the biennium ending August 31, 2019.

However, the bill will have a direct impact of a revenue loss to the Property Tax Relief Fund of ($26,517,000) for the 2020-21 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.

Bill Analysis

Current law allows for the deduction from total revenue for calculating the taxable margin for some business on certain contracts with the federal government. SB 1031 would amend current Tax Code by expanding the allowable requirements to include all taxable entities with at least one federal contract which qualify under the Federal Acquisition and the Defense Acquisition federal regulations. 

Vote Recommendation Notes

Preferential tax treatment designed to benefit one preferred class of people to the exclusion of others is a violation of limited government. Such treatment, which may only benefit a small number of people, has the cumulative effect of diminishing the tax base, making it more difficult to achieve fair taxes for everyone, and places the tax burden on an ever-shrinking number of people. We support a tax system that is low rate, broad based, and treats everyone equally. For this infringement on individual liberty, we oppose SB 1031.

With respect to the franchise tax we have elsewhere supported legislation to phase the tax out for everyone over time. This is a much better approach which will benefit everyone burdened by the franchise tax.