Chamber Applauds Franchise Tax Repeal

Senate Passes Legislation Repealing State Franchise Tax
Repeal Will Mean More Jobs, Investment for State

OKLAHOMA CITY (March 13, 2013) – Legislation repealing the state’s burdensome franchise tax passed the Senate today.

Senate Bill 341, by Sen. Mike Mazzei, eliminates the franchise tax in Oklahoma. The franchise tax is a tax that corporations pay based on the amount of capital invested in Oklahoma; essentially it a tax for the right to do business in Oklahoma.

“Our state’s franchise tax hurts small businesses across our state and discourages additional capital investment and job growth. Our state needs a tax structure that encourages growth, not hampers it,” said Gwendolyn Caldwell, Senior Vice President of Government Affairs for the State Chamber of Oklahoma. “The franchise tax puts companies that want to or currently do business in Oklahoma at a huge tax disadvantage and serves as a disincentive for economic development.”

According to the Oklahoma Tax Commission, corporations are taxed $1.25 for every $1000 they invest in Oklahoma. The franchise tax goes above and beyond the already existing 6 percent corporate tax assessed on business, making Oklahoma a less attractive place to do business. The franchise tax is especially hard on small business, as often the cost of compliance is more than the amount the state receives in taxes.

“Small business is the backbone of Oklahoma’s economy. Our state’s franchise tax is particularly burdensome for our small businesses that often operate on thin margins,” said Tim Morris, President of ML Products, LLC and the State Chamber’s small business Business Ambassador. “It helps Oklahoma’s economy when small businesses are able to reinvest in their company and hire more employees and raise wages. Eliminating the franchise tax will give our small businesses more flexibility to grow.”

The bill passed the Senate with a vote of 44-0 and now moves to the House for further consideration. Similar legislation, House Bill 1716, also passed the House with a vote of 79-14 this week.

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Contact: Jennifer Monies
jmonies@okstatechamber.com
405-235-3669