The House Ways and Means Committee is meeting Tuesday to hear testimony on the margins tax. The complicated law is unpopular and does not generate the incomes that lawmakers expected.
The Texas Constitution bans taxes based on income. The Texas margins tax, also known as the franchise tax, levies a tax based on the size of the company, after some exclusions. That means that companies that lose money can be required to pay taxes anyway.
Democratic lawmakers complain that because the business tax consistently underperforms, the state is short $4 billion every year. Republicans have promised to improve the system. The Legislature meets again in January, when they will likely amend the tax.