Newspaper article THE JOURNAL RECORD

Measure Would Exempt Businesses with Limited Franchise Tax Liability

Newspaper article THE JOURNAL RECORD

Measure Would Exempt Businesses with Limited Franchise Tax Liability

Article excerpt

A bill filed by Rep. Jack Bonny, D-Burns Flat, would exempt businesses with a corporate franchise tax liability of $20 or less, more than half of Oklahoma firms, from paying the tax.

Bonny, who chairs the House Small Business Committee, has filed House Bill 1895 for consideration during the legislative session that begins Feb. 7.

During an interim study of the exemption concept, Bonny said that paying a $20 franchise tax bill can cost a small business up to $150 in paperwork, accountant fees and other compliance-related expenditures.

He said that exempting these smaller businesses could cost the state $450,000 in tax revenue, but could also save thousands of dollars in administering the tax compliance system.

Last year, Bonny and Sen. Jim Maddox, D-Lawton, who chairs the Senate Small Business Committee, introduced House Bill 1278, which would have exempted corporations with a franchise tax liability of $250 or less from paying the tax. This would have cost the state some $2.7 million in tax revenue, but would have exempted about 43,000 businesses, about 80 percent of franchise tax filers, from having to pay the tax. The measure became stalled in joint conference.

Oklahoma levies its franchise tax at a rate of $1.25 per $1,000 of capital employed in this state. The tax ranges from a minimum of $10 to a maximum of $20,000.

About half of franchise taxpayers, or 39,605 businesses, pay the minimum. Another 56,315 pay up to $100, with 64,539 companies paying up to $250 and only 567 corporations paying the maximum of $20,000.

Almost 80,000 Oklahoma corporations pay franchise taxes, from which the state collected $36.9 million in the fiscal year that ended on June 30. For the fiscal year ending June 30, 1998, the total was $43.3 million, but officials said the difference may be partially attributable to the fact that lawmakers changed the filing date for the tax. …

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