Business Tax Expansion Causes Concern

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Texas business owners are paying close attention to Gov. Perry's business tax expansion to fund public schools. The House has already passed the measure; now it's in the hands of the Senate.

Currently six out of seven Texas businesses don't pay a franchise tax, so Gov. Rick Perry is revamping the system with a broader based business tax. That could mean higher taxes, and that has some businesses worried.

The new bill would close some franchise tax loopholes and require businesses with $300,000 or more in net margin profits to pay one percent of their profits to state taxes. This would raise $3.5 billion and reduce property taxes by a third.

"Businesses understand that there's a responsibility for taxes to provide the economy in the state. Businesses are certainly not trying to avoid that. What we're interested in is a fair tax that's equitable and that doesn't unnecessarily burden businesses more than it should," said Royce Hickman with the Bryan/ College Station Chamber of Commerce.

The proposed plan would also tax legal and medical services. Right now it does not include nonprofit hospitals like St. Joseph Regional Health Center, but that could all change with amendments.

"It would definitely hurt St. Joseph. Any additional tax on not for profits right now would be some what detrimental because we already do such a large load of uncompensated and bad debt," said Gentry Woodard, St. Joseph's Director of Legislative Affairs.

The Med is owned by a corporation and would have to pay the tax. Corporate officials were unavailable for comment on exactly how that would affect the hospital.

Now the business tax expansion measure moves on to the senate which could mean lots of changes so businesses, hospitals, and legal service groups will be watching closely to see what's in store for them.