There’s fair and then fair share
I know that our state franchise tax system is screwed up and as I started reading this, I thought this is just another example.
The state’s new margin tax will drive away headquarters of Texas-based trucking companies to other states unless the law is changed to allow more payroll deductions, a national association warns.
But as I continued reading, I begin to think it shows the problems in more ways than one.
The Transportation Intermediaries Association, based in Alexandria, Va., said the inability for Texas carriers to deduct their driver payrolls results in tax burdens high enough to make carriers move their offices out of Texas.Association Chief Executive and President Robert Voltmann gave the example of a Texas motor carrier with $13.5 million in revenue. For 2006, that carrier paid $14,000 in taxes under the old Texas franchise tax system.
Under the Texas margin tax, the company would pay $94,000 for 2007, said Terry Bowen, tax manager for the San Antonio accounting firm of Carneiro, Chumney & Co. Bowen said the new Texas tax limits taxable revenue to 70 percent for companies unable to deduct payrolls or the cost of goods sold.
Even if carriers could deduct their compensation for independent contracts, Voltmann said, the tax bill for the same carrier would rise to $49,000.
Fuel is the top expense for trucking companies, and driver compensation comes next. Neither can be subtracted from revenue under the margin tax law.
Excuse me, did you just say that a company with $13.5 million dollars in revenue only paid $14,000 in taxes under the old system? And while their new tax burden increased by six times it was still under $100,000.
I’m sure there are plenty of people who would be quick to point out that the franchise tax is on top of the property taxes the company is already paying. But part of the problem in Texas is that we don’t really know the value of commercial property.
Then there is the sales tax they pay like everyone else and of course they are supporting our transportation system by paying the gas tax which hasn’t increased in fourteen or so years.
And while independent contractors may maintain their own trucks better, don’t they also pay for their own fuel costs? Is the trucking company not allowed to deduct any mileage allowance they give to the independent operator on their federal taxes? And in which states would the trucking industry pay less in taxes than Texas?
What this looks like to me is that the trucking industry is being forced to pay more taxes relative to other industries in Texas which probably isn’t fair. However, are they paying more taxes than trucking companies in other states? Now that’s the question which naturally isn’t even addressed in the column.
Our tax system is a mess and the only thing I’m certain of in this case is that anything that “remedies” the trucking industry’s situation is going to cause problems for some other industry. And in the mean time no one is stopping to ask if a tax less than 1 % of revenue too little much to begin with.
Filed under: David Hendricks, Franchise Tax, Independent contractors, Robert Voltmann, San Antonio Express News, Terry Bowen, Transportation Intermediaries Association, Trucking Industry, Uncategorized, tax policy, texas
