Senate Committee Finance Chair Steve Ogden has filed SJR 52 that has been reported to give legislators the ability to replace the state margins tax with a corporate income tax that could be extended to limited partnerships that aren’t covered under the current system.
A temporary provision in SJR 52 would give the state and the business community two years to make the transition to a broad-based income tax on corporations and limited partnerships by applying the change to tax liability that’s due on or after January 1, 2014.
While tax bills must originate in the House, the Senate can file a joint resolution that, if supported by 2/3 in each chamber, will take the issue to the voters.
The bill was filed on April 13 and referred to Senate Finance the following day.
Text of SJR 52:
A JOINT RESOLUTION
proposing a constitutional amendment clarifying that a tax imposed on certain business entities is not subject to Section 24, Article VIII, Texas Constitution, and imposing certain limitations on the computation of a tax imposed on a business entity.
BE IT RESOLVED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 24, Article VIII, Texas Constitution, is amended by adding Subsection (k) to read as follows:
(k) Notwithstanding any other provision of this section, this section does not apply to a tax imposed on a business entity that is organized under the laws of this state, another state, or a foreign nation to provide liability protection for the owners from the debts and other obligations of the business entity.
SECTION 2. Article VIII, Texas Constitution, is amended by adding Section 25 to read as follows:
Sec. 25. A tax imposed on a business entity may not be computed using the business entity’s taxable margin, as determined under Section 171.101, Tax Code, as that section existed on January 1, 2011, or a substantially similar tax base.
SECTION 3. The following temporary provision is added to the Texas Constitution:
TEMPORARY PROVISION. (a) This temporary provision applies to the constitutional amendment proposed by the 82nd Legislature, Regular Session, 2011, clarifying that a tax imposed on a business entity organized to provide liability protection for the owners from the debts and other obligations of the business entity is not a tax subject to Section 24, Article VIII, of this constitution and imposing certain limitations on the manner in which a tax imposed on a business entity may be computed.
(b) The changes made by Section 25, Article VIII, of this constitution, as added by the amendment, apply only to a tax liability of a business entity that is originally due on or after January 1, 2014.
(c) This temporary provision expires January 1, 2015.
SECTION 4. This proposed constitutional amendment shall be submitted to the voters at an election to be held November 8, 2011. The ballot shall be printed to provide for voting for or against the proposition: “The constitutional amendment clarifying that a tax imposed on a business entity organized to provide liability protection for the owners from the debts and other obligations of the business entity is not subject to Section 24, Article VIII, Texas Constitution, and imposing certain limitations on the manner in which a tax imposed on a business entity may be computed.”