Gov. Rick Perry announced a four-point plan on Monday that would lower the state's franchise tax rate by 5 percent to give Texas businesses relief from the state's franchise tax, the Austin Business Journal reported.
Perry's proposal consists of four parts: reducing the overall franchise tax rates by 5 percent, making permanent a $1 million deduction for businesses with up to $20 million in gross receipts, lowering the rate for businesses that file their taxes using the state's simplified "EZ form" and allowing out-of-state companies that relocate to Texas to deduct their moving expenses.
The remaining $600 million would pay for a 5 percent across-the-board cut in franchise tax rates for all businesses.
"We are the epicenter of job creation in this country," Perry said at the afternoon news conference at the Greater Austin Chamber of Commerce. But he warned Texas can't become complacent: "There are good competitors out there that are going to try to lure those businesses to their state."
The House and Senate already have passed their versions of a state budget for the next two years and will be negotiating differences. There is a list of unfunded priorities waiting for attention, and a $1.6 billion tax cut would have to be replaced with other funds.
Perry said he also wants the Legislature to give companies that move to Texas from out of state a one-time deduction for moving expenses in the first year that they pay the franchise tax, the ABJ reported.
Perry's so-called business tax relief plan also would make permanent the small business tax exemption that impacts 29,000 businesses and is set to expire in 2014, the ABJ said.
