Viewpoint: Thank the Texas Legislature for sparing employers from 329% tax increase

This article by TAB CEO Glenn Hamer was originally published by Austin Business Journal November 3, 2021. Texas lawmakers delivered a lifeline to local businesses during the third special session. Their thoughtful appropriation of the state’s American Rescue Plan Act funds sent reinforcements to the tourism and hospitality industry — and spared employers from severe tax increases. People need to know how significant this is because it is the secret ingredient that keeps companies moving to the Lone Star State by the droves. Here’s what happened: Pandemic-related layoffs skyrocketed the state’s unemployment rate, which created a $7.2 billion deficit in our unemployment insurance trust fund. According to the Texas Workforce Commission, employers would have had to shell out an additional $1.2 billion in UI taxes each year over the next seven years to cover the debt. That translates into a 329% tax increase for each of the seven years — a financially crippling increase that would have crushed businesses, many of which are still in recovery mode. Thankfully that isn’t going to happen. The Legislature passed a lifeline, Senate Bill 8 by Sen. Jane Nelson, allocating $7.2 billion in ARPA funds to replenish the UI trust. The bill also devotes $500 million to broadband expansion and sent $180 million in grants to tourism, travel and hospitality entities. This will help restaurants, distilleries and other businesses that that were negatively impacted by the pandemic. Additionally, SB 8 committed $15 million toward the “TRUE” initiative, legislation that the Texas Association of Business testified in support of during the regular session to re-skill and upskill programs at Texas’ community colleges. Gov. Greg Abbott prioritized this issue. Budget chairs Sen. Nelson and Rep. Greg Bonnen led the appropriations process, and good legislation was pushed across the finish line thanks to support from the big three: Gov. Abbott, Lt. Gov. Dan Patrick and Speaker Dade Phelan. We also have to tip our hats to members of the business community, local chambers of commerce, the Texas Restaurant Association, Texas Hotel & Lodging Association, National Federation of Independent Business and many others who advocated for these funds alongside TAB. We also appreciate the Legislature for rejecting new penalties and new private causes of action related to vaccine mandates. While there is room for sensible guardrails, new penalties would have been completely unfair given the apparent conflict with federal vaccine policies. The spirit of these decisions is one of the biggest reasons why Chief Executive Magazine named Texas the Best State for Business 17 years in a row. We have a pro-business culture. The world noticed when it was announced that Tesla is moving its headquarters out of Silicon Valley, but this is not a new trend. According to the Hoover Institution, from January 2018 to June 2021, Texas gained 114 out of the 265 companies that relocated their headquarters from California to other states.

Tesla, Charles Schwab, Oracle, Firefly Aerospace, WP Engine and many others move here because they know Texas offers the right recipe for people to succeed. We don’t have an income tax. We invest in top talent so our workforce stays competitive. Our government works alongside businesses to keep taxes and regulations reasonable. And we do all of this because when the economic climate is business-friendly, it leads to more jobs, higher wages and more resources for our communities. And sure, it doesn’t hurt that our barbecue is the best on the planet.