Flying somewhat beneath the radar screen of a Houston business community that is preoccupied by the corporate criminal case of the decade is a new proposed state tax on earnings of partners that exceeds $300,000 a year (are you listening, law firm partners?).
This Ft. Worth Star-Telegram editorial surveys the political landscape regarding the proposed tax, which has been proposed by the so-called Sharp Commission, the special tax reform commission that former state comptroller John Sharp chaired. The proposed tax is part of a legislative effort to meet a June, 2006 deadline to fix the stateís funding system for schools and — as you might expect — more than a few law firms are opposing it.
Among other things, the Star-Telegram editorial notes that opponents are contending that the tax is unconstitutional because the Texas Constitution contains a 1993 amendment that specifically prohibits any ìtax on the net incomes of natural persons, including a personís share of partnership and unincorporated association incomeî without approval by voters in a statewide referendum.
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Longtime Houston attorney Tom Kirkendall's observations on developments in law, business, medicine, culture, sports, and other matters of general interest to the Houston business, professional, and academic communities.
If such a tax needs to be approved by the voters, I suggest they submit the proposition to the voters. Does anyone think it wouldn’t pass with overwhelming support?
There’s a long-standing sentiment in Austin that attorneys don’t pay their fair share.
If that is the correct phrasing of said constitutional provision, what idiot judge decided that a franchise tax computed the same way as federal income tax isn’t a tax on the net income of unincorporated associations (to wit, LLCs)?
I note that it’s a tax on partners, not a tax on law partners, so a lot of firms would be hit, not just law firms. The commission may be using antipathy towards lawyers to disguise the true extent of the tax. What they’re really trying to do is extend the franchise tax (aka business income tax) in a sneaky way to general and limited partnerships, who currently don’t pay the tax.
The tax passed.
Perry just lost the vote of this republican.