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Request to delay franchise tax rejected

08:57 PM CDT on Tuesday, April 29, 2008

By Lee McGuire / 11 News

Click on video for Lee McGuire's 11 News report

HOUSTON -- The Yellow Pages, these days, is a list of the livid.

11 News thumbed through the business listings of the phone book and found Dan Bawden, the owner of Legal Eagle Contractors. He is like thousands of other small business owners perturbed about paying the state’s new franchise tax.

"It's frustrating. I don't know where it came from,” said Bawden, who owns a remodeling company. “It's just one more big brother thing."

His small business faces a $6,000 tax bill, payable to the state as part of Texas’ revised franchise tax.

Even those who wrote the law creating the expanded tax call it one of the most complicated formulas in the country.

To that end, a Houston state senator is pushing to give business owners like Bawden more time to pay their tax bill.

"This was a disaster from the beginning and should have never been passed,” said State Sen. Dan Patrick.

In a letter to State Comptroller Susan Combs, Patrick asked her to delay collecting the tax until October.

On Tuesday she wrote back, thanking him for his interest in the tax, but saying no to a delay.

So where did the business tax come from? At the same time that Governor Rick Perry and others in the state legislature were bragging about property tax cuts, they paid for the decrease by expanding the state’s franchise tax, which is essentially a tax on businesses.

So those property tax cuts two years ago that have for the most part been eaten up by appraisal increases had a dark side.

And since the business tax is what is paying for that property tax reduction, if you eliminate, cut or delay the business tax you will blow a huge hole in the state's budget.

And while he is the one writing a big check to the state, Bawden said he is not the one really paying it.

"Well guess who it gets passed on to? It gets passed on to the consumers. It's another business expense for us,” said Bawden. “Just like the gasoline increase, the cost is passed on at the grocery store; the consumer always ends up paying."

The bills to do business are going up, all to pay for a property tax cut you probably barely noticed.

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