New Year Brings Multitude of New State Tax Laws
January 3, 2007
January 1 not only marks the first day of a new year, it is also often the date new state tax laws take effect.
This January 1 Texas had the largest change to its tax system as the Margins Tax, Texas’ version of a gross receipts tax, went into effect.
The Margins Tax was implemented to replace the Franchise Tax to increase revenue for increased education spending as mandated by the Texas Supreme Court.
Property taxes will decrease as a result of the Margins Tax, but tobacco taxes will increase. Smokers in Texas are already feeling the pinch.
Gross receipts taxes such as the Margins Tax are economically harmful in several ways. See a recent Tax Foundation paper laying out the problems with gross receipts taxes to learn more.
Also, check out pages 40 and 41 in the State Business Tax Climate Index to see more changes that took place in various states, and look for a forthcoming paper from Chris Atkins to learn more about education spending and judicial mandates.