Franchise Tax Credit for Community Colleges 

Texas can further its policy of placing the education of our children first by creating a state tax incentive that encourages businesses to contribute to community colleges.

Under this proposal, businesses would receive a 50% credit against their franchise tax for charitable contributions made to qualified educational organizations.

1. The state already provides credits to the franchise tax for a number of purposes, including employment created in an enterprise zone, employment of certain children, and even employment of inmates. It makes sense to use this tool as an incentive to encourage business to support education.

2. "Qualified Educational Organization" means a non-profit corporation organized for educational purposes to aid community colleges or other schools for at risk children that is exempt from the franchise tax, and that utilizes at least 80% of its total funds for direct assistance to economically disadvantage children.

3. Federal tax policy already encourages this type of charitable giving. We are urging the state to adopt a similar policy. This policy is very consistent with the legislature's goal of placing education first.