The debate on job creation and retention was finally taken to the next level in November 2013 when the Legislature convened to pass measures that create tax and regulatory certainty for the aerospace industry. Building on the concepts brought forward to encourage job creation, Rep. Drew MacEwen introduced House Bill 2264 that would refine our state’s business and occupation tax (B&O) structure and help small businesses succeed.
“I was very pleased to see the door open to a greater discussion on a long-held belief by me and others that how we structure our tax system matters to our job creators and job seekers alike,” said MacEwen, R-Union. “We cannot continue to do business as usual and expect to turn our economy around in a way that gets everyone seeking work a shot at a good-paying job. Aligning our tax structure with our goals of job creation is absolutely critical for the workers of today and tomorrow.”
House Bill 2264 would offer businesses relief from the state’s B&O tax, which is the tax applied to businesses’ gross receipts. “Gross receipts” is defined as gross income, or total sales receipts before payroll and other business expenses. Different rates are applied at various rates based on business activity classifications, such as manufacturing, retail, or service sectors.
Instead of the current structure of B&O tax and credits for certain industries, MacEwen’s bill would give businesses a choice of three deductions from the B&O tax in each filing year:
- Costs of goods sold;
- 30 percent of gross revenue; or
- Up to $300,000 in employee compensation.
Businesses could choose whichever deduction results in a greater benefit to their tax liability.
“My legislation mimics the efforts Texas has made to entice employers to locate and expand in the state,” MacEwen explained. “It’s not about pitting the environment against jobs or education against tax collections; it’s about creating an environment that allows for responsible and reliable job growth through enticing inward migration of businesses and small start-ups. By expanding employment, we grow revenues to the state that supports education, social services and the myriad of programs we all support.”
MacEwen, who is a small-business owner, added that the state would gain momentum on other states attempting to lure our employers away by modernizing the state business tax structure. It is estimated, he said, House Bill 2264 could create 2,200 jobs in the first year alone.
“If we want to know why Boeing looked to Chicago, South Carolina, Alabama and Utah, we need only look at the unpredictability of taxation and the onerous regulatory scheme that costs businesses billions each year,” MacEwen said. “As a state with one of the highest start-up business failures, legislation like mine could start to turn this trend around. I firmly believe we can fix our state’s economy by retooling how we tax businesses to compete seriously with other states and countries.”
House Bill 2264 has not yet been scheduled for a public hearing.