Texas instead charges your property just for existing (3rd-highest property tax in the nation). Different states choose different revenue mixes; Texas has largely chosen property taxes, sales taxes, and oil/gas severance taxes, plus in recent years the "margin tax" on larger companies.
- Texas doesn't have a state property tax; all property tax revenue goes to local tax authorities. You could argue this is just shifting a burden downstream, but I like that system better than a from-on-high budget distribution.
- Property tax applies to all real estate, not just businesses, so I'm not sure what this has to do with business taxes.
<i>- Property tax applies to all real estate, not just businesses, so I'm not sure what this has to do with business taxes.</i>
Actually, Texas (or perhaps local authorities) levies a property tax on all business assets. If you host a website on a server in texas, they will levy a property tax on the server. Sometimes that's paid by the hosting firm. Sometimes, it's passed on to clients.
I did not know such a thing existed. I find it rather surprising. In reading about it, though, none of the money from that tax goes to Austin, either. Additionally, if I am reading the law correctly, all businesses, incorporated or not, are subject to this.
Edit: I should also note that, as a resident of Texas, my hypothetical company would have to pay the exact same amount to various Texas tax authorities regardless of where it was incorporated.
I looked this up and found nothing of the sort. I've run a C-Corp in Texas for 7 years now and I'm quite sure our accountant would have brought this up at some point.
For taxation purposes, your property is classified as either real property (land, buildings, and other items attached to land) or personal property (items that can be owned but are not attached to land). Tangible personal property that you use to produce income is subject to taxation in the state of Texas. Tangible personal property includes such things as furniture, fixtures, inventories, equipment, motor vehicles, vessels, and aircraft. These items are typically referred to as business personal property.
Real property is special. You only truly own it if you're a country. Otherwise you have an encumbered title to the land and taxation is just part of the deal.
Movable property taxes, on the other hand, are BS.
Well yes, but I'd argue owning a corporation is pretty similar. The right to organize in a form that lets you incur debts you're shielded from paying back isn't some kind of natural state, but a creation of law in order to encourage certain kinds of commercial activity. Things like corporate taxes are imo a perfect legitimate part of the deal, if a government chooses to impose them.
I do think sole proprietorships should not require registration as businesses or payment of a separate tax (besides any personal taxes), though.
> As a small business the value of protection you receive from the state is incalculably larger than the price you pay.
Unless you are in CA and are a small or side business with little revenue (thinking side consulting gigs, etc).
The minimum tax liability + biz license and other fees (base tax of $800 or more depending on revenue + biz license + other fees) quickly makes it not worth incorporating in CA if you can avoid it. That is, unless you are making more than a few thousand a year from your side gig.
