KRONBERG: Veto rumors surrounding the margin tax correction bill

Just because session is over doesn't mean the drama has ended. Check out this tidbit from Quorum Report publisher and TSCPA pal, Harvey Kronberg:

VETO RUMORS ON FRANCHISE TAX CLEANUP BILL STIRS CAPITAL COMMUNITY
NFIB wonders if small business will get a seat at the table with the advisory group it recommended

Maybe it’s the heat. Maybe it’s the restiveness brought on by having nothing to do but WAIT for the Guv’s final seal of approval or disapproval for your bill. In any case, rumors this time of year can get legs quicker than a tadpole in a pond.

Case in point: the rumor du jour yesterday was that the franchise tax cleanup bill, HB 3928, was in trouble because it conserved the gross receipts option for the minority of businesses that would benefit from it. Gross receipts taxes are anathema in some tax reform circles so it could be considered the politically smart thing to do to veto the bill. Or so the thinking went yesterday.

It is true that several groups were criticizing the bill during the legislative process for making the gross receipts tax the default option in case the new margins tax was struck down by a court ruling. However, that "poison pill" language was addressed on the Senate floor to the satisfaction of most stakeholders. The bill also had several other provisions that were considered beneficial to small businesses, including an expansion of the tax exemption for small businesses.

Still, the veto threat was credible enough to force at least two high-level operators on tax issues to hit the phones in a serious way yesterday. Today, the threat level appears to have lowered but as one observer put it, it would be wise to keep an eye out on this one.

The franchise tax bill also contains a lesson in how an idea thrown into the mix by one stakeholder can find that idea bent beyond recognition at the other end of the legislative process. NFIB could never be counted as a big fan of HB 3928 but its legislative director, Lance Lively, wanted to take some of the sting out through the formation of an advisory council that would monitor how the new tax affects small businesses.

Well, by the time the sausage grinder had stopped cranking, the small business advisory council had become an "all-business" tax advisory council. That kind of defeats the purpose of Lively’s idea, according to NFIB spokeswoman Laura Stromberg, because small and large businesses often have diametrically opposed interests when it comes to how taxes are structured.

Stromberg added that her group will now pay close attention to the makeup of the new council to ensure that small businesses’ interests are not crowded out.

The Governor’s Office hasn’t given indication publicly one way or the other on whether Perry will sign HB 3928.