Strong Texas economy leads to tax cuts for state's businesses
Gov. Rick Perry
AUSTIN – Texas' strong economy and low unemployment are bringing an additional benefit to the state's businesses in the form of a tax cut.
Gov. Rick Perry announced March 10 that an estimated 370,000 Texas businesses will be getting a tax cut of $90 million.
"I believe in truth-in-budgeting: when government levies a tax and collects more money than is needed, we must either stop collecting the tax, return the money or both," said Gov. Perry in a press release. "Thanks to our healthy economy and low unemployment rate last year, the state collected more money for the unemployment trust fund than we need, which is why I'm directing the state to bring that tax to a screeching halt for this year."
Around 370,000 businesses will get a one-year suspension of Unemployment Insurance replenishment tax. The Texas Workforce Commission approved the suspension of the tax after reviewing employment figures and economic forecasts for Texas and determined there were sufficient reserves to meet unemployment obligations for 2008.
In 2007, Texas created more jobs than any other state in the nation, resulting in record-low unemployment, at 4.5 percent in December.
In addition to the one-year suspension of the 0.12 percent replenishment tax, TWC will continue to distribute the surplus tax credit announced in October to those qualifying employers who file quarterly unemployment tax reports and owe UI taxes.
"With this one-year suspension of the UI replenishment tax, the overall 2008 tax rate for Texas employers will be even lower than previously announced and is just one example of the competitive environment that Gov. Perry and other state leaders are trying to foster for Texas businesses," said TWC Commissioner Ron Lehman.
The 2008 UI tax rates also reflect the elimination of the obligation assessment, previously a component of the UI tax. The 80th Texas Legislature passed a measure allowing TWC to pay off bonds issued in 2003 to bolster the Trust Fund. By paying off the bonds early, Texas employers will save an additional estimated $270 million in taxes in 2008.