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Master's Professional Reports Abstract



An Evaluation of the Texas Franchise Tax

The franchise tax is the state's primary business tax and has been around since its inception in 1879. The franchise tax is levied on all corporations, including S corporations, banks, savings and loan institutions, and limited liability companies doing business in Texas. The franchise tax is a license for the "privilege" of conducting business in Texas behind the liability veil provided by state law. This paper evaluates the franchise tax and recommends possible changes to make the tax more equitable, efficient, adequate and simple.

Chapter One discusses the history of the franchise tax. Chapter Two discusses who pays the franchise tax. Chapter Three describes how the franchise tax is calculated. Chapter Four discusses interstate comparisons. Chapter Five discusses the collection allocation, and reporting of the tax. Chapter Six discusses the evaluation of the franchise tax. Chapter Seven discusses economic development provisions and exemptions. Chapter Eight discusses methods of tax avoidance and Chapter Nine is the summary and recommendations.

--Author's introduction.