Governor's Message to the 56th legislature. Page: 15 of 41
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"As previously noted, the Texas formula for allocating
interstate business to the State for franchise tax purposes
does not usually reach as large a percentage of such business
as the formulas in use by many other states."
The Commission describes the formula and says that if "it were deemed advisable
to reach a larger portion of interstate business, this could be done by employing"
this formula. It estimates that in changing the present tax base it would increase
State revenue $15, 000, 000 per year, and this has been confirmed as a conservative
estimate by the Secretary of State. If the Commission's work had revealed nothing
more than this increased source of revenue, its long labors have been fully rewarded.
I compliment the Commission not only on this but on all of the valuable information
contained in its report. As pointed out by the Commission, the proposed change is
a recognized formula "widely used by other states and has been recommended by a
Study Committee of the National Tax Association for use by corporations where separate
accounting is not possible. "
I further recommend that for one year, beginning May 1, 1959, and automatically
ending 12 months thereafter, that the rate of our franchise tax be increased
60 cents per $1, 000 of capital, which would be a one-year increase in the present
tax from $2. 25 to $2.85 per $1,000 of taxable capital. If enacted before May 1 of
this year, this will yield an additional $14, 000, 000 in revenue for this fiscal year.
This is the best place to put the only new tax necessary under this program,because
it is as broad-based as any tax which will be due in full before the end of the fiscal
year; its payment can be deducted from the Federal income tax, which means that
at least 52% of it would go to Washington if it is not collected here; and because it
is payable on May 1 in advance, for the right to do business during the following year.
Every business corporation in this State should be willing to share for one year in the
retirement of this amount of the deficit, because, even with our franchise tax
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Price, Daniel. Governor's Message to the 56th legislature., book, January 21, 1959; Austin, Texas. (texashistory.unt.edu/ark:/67531/metapth5870/m1/15/: accessed July 22, 2017), University of North Texas Libraries, The Portal to Texas History, texashistory.unt.edu; .