Texas Proposition 10, which will be voted on by Texas residents on November 7th, has the potential to shift the tax burden on medical manufacturers in the state. The proposed constitutional amendment aims to attract medical device manufacturers to Texas by exempting them from inventory taxes. However, this exemption will result in other taxpayers, including individuals and businesses, having to bear a larger portion of the tax burden for school, city, county, and college taxes.
Joe Don Bobbitt, the chief appraiser for the McLennan Central Appraisal District, estimates that about 17 companies in the Greater Waco Area would be affected by Proposition 10, resulting in a reduction of approximately $100,700 in inventory tax revenue. While this amount might not have a significant impact on the overall tax levy in the county, it will lead to a shift in the burden onto taxpayers who do not qualify for the exemption.
State Senator Joan Huffman, the author of Senate Joint Resolution 87, which introduced Proposition 10, argues that the amendment aims to provide preferential tax treatment to medical manufacturers in order to encourage them to produce their products in Texas. She believes that attracting these companies will help create high-paying jobs and expand the tax base. Additionally, Huffman highlights the importance of having medical products manufactured within the state to strengthen the healthcare network and supply chain, especially in light of the recent pandemic.
If passed, Proposition 10 would allow for a personal property tax exemption on equipment, supplies, and inventory used in the manufacturing of medical or biomedical products, as well as pharmaceuticals and medical personal protective equipment. The current tax structure on these inventories has been seen as a deterrent to capital investment and expansion in the medical manufacturing industry in Texas.
While proponents of Proposition 10 argue that it will make Texas a more attractive location for medical manufacturing, some critics believe that the exemption should apply to all businesses, not just those in the medical industry. Texas Representative Brian Harrison, who voted against the measure, argues that providing tax exemptions to specific businesses can lead to market distortions. He believes that a fairer approach would be to lower tax rates and reduce regulatory burdens for all businesses across the board.
As Texas voters prepare to decide on Proposition 10, the potential impact on the tax burden and the overall economy of the state remains a topic of debate. Proponents believe it will bring economic benefits and strengthen the healthcare industry, while opponents argue for a more equal and comprehensive approach to tax reforms. The outcome of the vote will determine the future tax landscape for medical manufacturers in Texas.
