Download Texas Revenues III

Texas Revenues III
April 25, 2017
By PresenterMedia.com
Corporate Income Tax
Franchise Tax
The franchise tax is a
gross-receipts tax of
0.75 percent on
businesses chartered
or organized in Texas
and doing business in
the state. It is the
primary tax assessed
by state government
on business.
Keep in mind that
businesses also pay
property taxes to local
governments and sales
taxes to both levels of
government..
Severance Taxes
A tax levied on
natural resources at
the time they are
taken from the land
or water is known as
a severance tax. The
most important
severance taxes in
Texas are levied on
the production of oil
and natural gas.
Would you expect severance tax
collections to be rising or falling?
Severance taxes are now falling
because of falling prices.
Severance Taxes
Severance taxes are
important to the state,
but they are not as
important in Texas as
in other energy states
as a percentage of
state revenues.
Falling oil and
gas prices
hurt Texas less
than some
other states.
Nonetheless,Texas
collects more money
from oil and gas
taxes than any other
state except Alaska.
Rainy Day Fund
Revenues from oil and
gas production fund
the Economic
Stabilization Fund,
which is known as the
Rainy Day Fund. It
was created to help
fund the budget in
tight economic times.
Politics of Rain
It takes a two-thirds vote to
spend the Rainy Day Fund.
The Rainy Day Fund
contains more than
$8 billion. Should
the legislature use
the money to fund
state services, return
it to taxpayers as a
tax cut, or let it sit?
Oil and gas production
has been growing.
Why the recent
increase in the fund?
Excise Taxes
Texas state
government levies
excise taxes on
motor vehicle sales
and rentals, motor
fuels, alcohol, and
tobacco.
Excise taxes are
selective sales taxes,
levied on a single
item or class of items
only.
Gasoline Tax
Explain the benefits received
theory of taxation.
Those who benefit from a
service pay the taxes to
provide it.
The gasoline tax
reflects the benefits
received theory of
taxation because
money generated by
it primarily goes to
fund road
maintenance and
highway
construction.
The Texas gasoline tax rate of 20 cents a gallon is well below the national average
of 30 cents a gallon. (The figure above shows the COMBINED state and federal
gasoline tax rate in each state.)
What are sin taxes?
Sin Taxes
A sin tax is a levy on
an activity that some
people consider
morally
objectionable, such
as smoking or
drinking.
This is a joke. Not
all professional
services are taxed
in Texas.
Non-Tax Revenue Sources
60 percent of state revenue comes
from non-tax sources
• Federal funds
• Licenses and fees
• Interest and investment income
• Lottery
• Land income
Licenses and Fees
Texans who wish to
drive a motor vehicle,
operate a business,
practice a profession,
go hunting and fishing,
attend a state
university, or sell
alcoholic beverages
must purchase licenses
or pay a fee for the
privilege.
Interest & Investment Income
The state of Texas
holds billions of
dollars in cash and
securities that
generate dividend
and interest income
from their investment.
Funds
• Texas
Teacher Retirement System (TRS)
Trust Fund
• Employee Retirement System (ERS) Trust
Fund
• Permanent School Fund (PSF)
• Permanent University Fund (PUF)
Land Income
The state of Texas owns
more than 20 million
acres of land that
produce revenue for the
state from leases for
agricultural use and for
oil and gas production.
Lottery
Since the Texas
Lottery began
operation in 1992 it
has generated more
than $24 billion for
the state.
Nonetheless, the
lottery accounts for
less than 2 percent of
state revenue.
Sales by Game
Pick 3
24 %
• Mega Millions 20
• Powerball
20
• Lotto Texas
14
• Daily 4
8
• Texas Two Step 4
• Cash 5
5
• All of Nothing
4
•
Scratch off tickets
generate more
money than other
games, including
Mega Millions and
Powerball.
What You Have Learned
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What is the franchise tax?
What are severance taxes?
What is the Rainy Day
Fund?
What are excise taxes?
What are the state’s most
important sources of nontax revenue?
How important is the lottery
as a source of state
revenue?