HBA-EDN H.B. 1601 77(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 1601
By: Davis, John
Ways & Means
3/22/2001
Introduced



BACKGROUND AND PURPOSE 

Under current law, corporations that gross less than $150,000 are exempt
from paying franchise taxes, regardless of where in the state the business
is located.  As concerns over air quality, access to water, and traffic
congestion grow, incentives are needed to encourage businesses to establish
themselves in less populated areas.  One of the primary obstacles that
businesses face with establishment in rural areas is the increased costs
associated with the distance from population centers.  House Bill 1601
increases the franchise tax exemption to $10 million for corporations that
establish themselves in counties with a population of less than 75,000.  

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

ANALYSIS

House Bill 1601 amends the Tax Code to provide that a corporation is not
required to pay any franchise taxes and is not considered to owe any
franchise taxes for a period if the corporation is a newly formed
corporation in a county with a population of less than 75,000 and the
amount of the corporation's gross receipts from its entire business is less
than $10 million for taxable capital and  is less than $10 million for
taxable earned surplus, including items of income generated outside this
state that are subject to allocation to the state of commercial domicile.   

EFFECTIVE DATE

January 1, 2002.