As the Texas Legislature nears the end of its biennial session, the biggest issue on the table is how best to cut taxes.

The state House has proposed a $4.8 billion tax relief package, including a 25 percent reduction in the state’s margin tax and a reduction in the state sales tax from 6.25 to 5.95 percent. The state Senate proposal also cuts the margin tax, but pairs this with reductions in the property tax, for a total $4.6 billion in tax relief.

That Texas is debating which taxes to cut (rather than which taxes to raise) is a positive sign. The danger, however, is that if the different chambers can’t agree on a single approach, we may end up with no tax relief at all.

For this reason, some in both the House and the Senate have suggested that the chambers could focus on where they agree: cutting the margin tax.

Here at R Street, we’ve written extensively about the damaging effects of Texas’ margin tax. The poorly designed tax distorts the Texas economy, is a hidden tax on consumers and forces high compliance costs even on businesses that end up having no tax liability.

Eventual elimination of the margin tax is a stated goal of the leadership of both chambers, and a $4.5 billion reduction would allow either a 50 percent rate reduction as part of a phase out, or full repeal in the second year of the biennium. Either option would be an encouraging sign that Texas remains committed to maintaining its reputation as a business-friendly environment.

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