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1 Scott Drenkard, The Texas Margin Tax: A Failed Experiment 1 (2015)

handle is hein.taxfoundation/texmatfe0001 and id is 1 raw text is: The Texas Margin Tax: FOUNDATION A Failed Experiment SPECIAL REPORT BySco Drerkard Jan. 2015 Economist & Manager of State Projects No. 226 Key Findings The Texas Margin Tax is routinely the subject of scrutiny from tax scholars because of its complexity and unfairness. The Margin Tax creates tax pyramiding, the process of taxes stacking on top of other taxes as a product moves through the production chain. The Margin Tax has attracted many lawsuits because of its structure. Of the three most notable challenges, one was decided in favor of the taxpayers, another in favor of the state, and one is still ongoing. The Margin Tax was expected to bring in $5.9 billion each year, but instead, the tax brought in $4.45 billion its first year, and $4 billion the next. Gross receipts-style taxes exist at the state level in just three states other than Texas: Delaware, Washington, and Ohio. Many states have repealed gross receipts-style taxes in the last fifteen years: Michigan (repealed 2011), Kentucky (enacted 2005, repealed 2006), New Jersey (repealed 2006), and Indiana (repealed 2002). Repealing the Margin Tax would improve Texas' ranking in the State Business Tax Climate Index from 10th to 3rd best in the country. One analysis shows that Margin Tax repeal would create 41,500 new jobs, $3.4 billion in new investment, and $9.8 billion in real disposable income over a four year period. Another analysis shows that if the Margin Tax had never been created, personal income would have grown as much $46.3 billion cumulatively between 2006 and 2013, a 0.57 percent increase over actual personal income growth during that period.

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