NOTE: This is a duplicate of an actual email sent to my state representative, respectfully. I can only imagine how difficult it must be to make everyone happy.
Reading today in the Dallas Morning News about the shortfall related to the switch over to the revised franchise tax was startling, especially since we've seen our restaurant's taxes go from $0 to over $X000 (about 7.5% of our net income) for the years it's been enacted and with no property tax reduction on the office building we reside in (our share of 2009 real estate taxes on the building and our property came to over $3X,000 last year). With 2009's tough economy, I'm expecting our state franchise tax to come in around 15% of our net income.
My name is Amy Severson, and with my husband Jim own a restaurant in Dallas called Sevy's Grill. Since our business has both high product and labor costs, the franchise tax has a real impact on our bottom line, even though we are taxed at half of the percentage many other industries are taxed at. I would hope our state legislators will examine who is paying more and who is paying less under this system before deciding that the rates need to be increased. We are getting through this like many other restaurants, but have made difficult sacrifices in order to not lay off one single employee so far.
I'd like to put in my two cents about other ways in which the State of Texas can make the deficit shrink, while also making taxes more fair and equitable for small businesses in the restaurant industry. I could see where certain groups (law enforcement, MADD, local municipalities) might embrace it, and it would be difficult for the TRA to oppose.
Did you know that some restaurants can charge an 8.25% sales tax on top of the price of an alcoholic beverage sale while others have to remit a 14% tax on the total sales price? And this 14% is hidden from the consumer, so they have the impression that one place offers a "cheaper" drink than the other. Hardly equal and fair, and looking at many of the same products being sold raises the question, why? Of course the facile answer is because of the difference in licensing (Mixed Beverage vs. Beer/Wine permit), but I'm not talking about that, I'm talking about the philosophical reasons of why. Does beer and wine get a person less drunk? No. Does a person only drinking beer or wine incur less cost to law enforcement and municipalities to monitor? No. Do under-aged adults require less education about drinking beer and wine? No.
Now here's where the political part comes in, it might even sound good to a few other people. You get rid of the Mixed Beverage Gross Receipts tax, and instead have all retailers who sell poured alcohol charge 8.25% sales tax plus a 5.75% consumed alcohol tax.
Many in my industry who are already paying the 14% would love to be able to disclose on a guest's check how much of what they were charged goes to pay taxes, you'd hear a big sigh of relief from that area. This would be printed on the guest check, like an additional sales tax, and would be a net wash for the state of Texas and local governments when it comes to licensees with Mixed Beverage permits. It would bring in additional revenue from those who are consuming alcoholic beverages but not paying an equal share of the costs associated with the sale, which they are allowed to do only because hard liquor is not being sold on the premises.
I think voters would be largely ambivalent, because they realize that many times they are already paying the higher hidden taxes And when they read about things like the costs associated with stopping wrong-way drivers from driving up the Dallas Tollway and killing others, it makes perhaps more sense to raise more revenue to cover the true costs of drinking and driving.
The licensees with Beer/Wine permits would not be incurring any additional costs, it is a new charge being levied on the consumer, one being changed to become fair and equal to all sellers of consumed alcoholic beverages. Untouched too would be the packaged retailer's costs - I'll let some other Davina take on that Goliath. It might even save some costs for the Comptroller and the TABC, who knows? How could the Texas Restaurant Association oppose this move when many of it's members already incur such a "hidden" and unequally assessed tax to do business?
Not that this will plug up the entire deficit, but it is one alternative that could gain a wide range of support and very little opposition. Feel free to share it with others if you agree, I am only sending this to you, not other representatives, as I reside in your district.
Very truly yours,