Court Hears Challenge to State Business Tax

A successful challenge to the state's primary business tax would throw lawmakers into special session to try to find enough money to pay for public schools, a lawyer for the state told the Texas Supreme Court today. 

Allcat Claims Service and John Weakly are suing the state over the franchise tax, saying it violates a constitutional ban on personal income taxes in Texas because it taxes the business income of business partners as well as corporations.

The state's argument is that the tax doesn't tax the partners themselves — individuals who are protected from state income taxes — but ...

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