Texas touts itself as a warm bed for business, and Site Selection magazine gave it the Governor’s Cup again this year, saying Texas had the most qualifying projects of any state for new and expanded business facilities per capita. The award has become old hat for the Lone Star State, which collected the hardware in 2004, 2005, 2010, 2012, 2013 and 2014.
But the Tax Foundation, which prepared the 2017 State Business Tax Climate Index, has some unflattering things to say about Texas’ corporate taxation.
Overall, Texas ranked 14th among the 50 states in its report, which is not bad, but the summary said Texas has room for improvement. In the corporate tax category, Texas came in at No. 49, beating out only New Jersey. It ranked sixth in individual income tax; 37th in sales tax; 12th in unemployment insurance; and 37th in property tax.
The Tax Foundation said the culprit in Texas’ corporate tax structure is the Texas Margin Tax, which, in a report on the tax in 2015, the organization said “creates tax pyramiding” in that taxes stack up on top of other taxes as a product moves through the production chain. The Tax Foundation finds the process so distasteful, it calls the margin tax “a failed experiment.”
“Since going into effect in 2008, it has attracted criticism from experts in the field, attracted lawsuits from businesses that must comply with it, and attracted legislative changes as political pressure around the tax continues to mount,” The 2015 report states. “In fact, in the last legislative session, at least 89 bills were filed in the Texas Legislature aimed at changing the tax in some way, with eight aimed at repealing it entirely.”
The state did manage to lower the Margin Tax fractionally but failed to convince the Tax Foundation to improve its rating.
According to the Tax Foundation, the best business climates created by taxation policies are in Wyoming, South Dakota, Alaska, Florida, Nevada, Montana, New Hampshire, Indiana, Utah and Oregon. The 10 worst are in New Jersey, New York, California, Vermont, Minnesota, Ohio, Rhode Island, Connecticut, Maryland and Louisiana.
OPEC to cut production
Members of OPEC, the Organization of the Petroleum Exporting Countries, agreed last week to curtail oil production. But whether that move will create higher gasoline prices at the pump has become a subject of debate, with UBS Financial Services predicting minimal impact and Bloomberg seeing gas prices higher than they would have been.
Gregg Laskoski, an analyst with GasBuddy.com, suggests the announcement by OPEC could prove to be much ado about nothing.
“What they have announced is a preliminary framework for an agreement, but nobody can yet identify who’s in and who’s out,” Laskoski said. “I’ve heard Venezuela is not going to be asked to comply and that Libya and Nigeria might be exempt. There are still a lot of questions even about how much less oil would be produced. I think it is much more rhetoric than substance at this point, just something to get the financial markets’ attention.”
Fog surrounding the issue should begin clearing Nov. 30, “when the quotas for each country will be identified,” he said.
If OPEC keeps its pledge, “Russia, which is not an OPEC member, would seize the opportunity to capture that market share,” Laskoski said.
The United States, Canada and Mexico also may consider taking up the slack by increasing production.
Crude oil prices rose about $5 a barrel last week, and Texas saw its statewide average price for regular unleaded gasoline increase by 2 cents, to $1.97 a gallon, according to an AAA Texas report released Thursday. That price remains 7 cents per gallon less than the statewide average this time last year.
“Your average there in Texas remains below $2, which is good news,” Laskoski said. “I don’t think you have much to worry about.”
Austin Arms renovation
The Austin Arms apartment building at 13th Street and Austin Avenue has seen better days, and developers Shane and Cody Turner hope it sees them again.
The Turners announced in February 2014 they had acquired the five-story, 44-unit complex for about $200,000. They said they hoped to resurface the parking lot; refinish the floors; re-texture the walls and ceilings; and replace countertops, light fixtures and window cooling units.
Shane Turner said he also would like to install new energy-efficient windows, though with 350 windows, that would not be cheap.
Austin Arms now is all but deserted. Residents have left as their leases expired and the Turners did not renew them.
During a conversation last week, Shane Turner said there were about five residents still living at the L-shaped complex that dates to the mid-1920s.
He said he will not immediately assign a crew to the renovation of Austin Arms when it becomes vacant because other projects demand his time.
But the fact that Austin Arms is nearly empty puts him closer to turning the eyesore into an asset on the edge of downtown Waco.
“I didn’t want to put the cart before the horse,” Turner said of his timing. “We still will do what we said we would do, but exactly when, I could not say.”
More pizza options
Pizza places are making a beeline to Waco these days, and those already here are looking to expand. Here are a few examples:
An press release from Papa Murphy’s, a Washington-based chain that has grown to 1,500 locations, said it intends to build eight stores in the Greater Waco market, possibly within the next 12 to 18 months. Papa Murphy’s specializes in online orders for pizza assembled in the shop and baked at home.
Pizza Hut reportedly is interested in moving into the former Smashburger location in Lakewood Center. Chris Fender, district manager for Restaurant Management Co., which is a franchisee for Pizza Hut in the Waco area, said the chain “definitely has made phone calls” about the availability of the space on Valley Mills Drive near Wooded Acres Drive. Pizza Hut now has five locations in Greater Waco, and Fender said it would weigh its options on closing one and replacing it with the Smashburger site or simply adding another. Smashburger, which specializes in gourmet burgers, unexpectedly closed its doors about two weeks ago.