Fahad Alrajaan Explains Benefits and Shortcomings of Texas Tax Incentives

With the hope of attracting new business, the state of Texas has introduced a number of enticing tax incentives specifically aimed at startups and other companies. These tax incentives are viewed by many as a necessary measure to ensure the continued economic success of the state while also stimulating continued innovation, making Texas something of a boomtown for startups. While the concept appears sound in principle, Fahad Alrajaan has expressed some lingering doubts regarding the efficacy of such a strategy while praising the positive effect the incentives may have nonetheless achieved.

The business expert explained that even though attractive tax incentives could be an effective measure for drawing new business to some degree, there are a host of factors involved in stimulating the kind of economic growth sought by those who approved the legislation in the first place. As is often the case with economic subjects, a nuanced approach to analysis is much more likely to result in an accurate understanding of the varied influences playing a role in the growth of new business, including tax incentives and other issues.

Of course, Fahad Alrajaan expressed that the tax incentives have been effective in some regards and pointed out that there are many sharp observers who are resolute in their belief that the correlation between recent business growth and the implementation of tax incentive legislation is much more likely to be true causation. Without taking a firm stance on either side of the argument, Fahad Alrajaan laid out what he believes are the positive aspects of the tax incentives and how they have been effective in bringing new business and innovation to the Lone Star State.

Among the many strategies employed by the state, one of the most appealing is the manner in which Texas limits taxes on property for those doing business in the state. Given that these taxes represent a significant cost consideration for businesses, it should not come as much of a surprise that the reduction in potential business expenses serves as a major draw for startups and other companies. When implemented, this legislation placed a 10-year limit on the “taxable value of the property extended to a taxpayer,” provided that the taxpayer could demonstrate an intention to create jobs by building on the property protected by the tax limitation.

Fahad Alrajaan also mentioned the positive impact of what the state refers to as its freeport exemption, which allows communities the freedom to decide to make certain goods exempt from property taxes as long as they only remain in-state for a period that does not exceed 175 days, though it is possible for communities to extend this exemption up to 730 days under certain circumstances. Obviously, there is a great deal of appeal for businesses selling goods that qualify for the freeport exemption, which would serve as another reason for a business to operate within the sizable borders of the state of Texas.

Even though supporters of these incentives and others believe that the state of Texas has clearly enjoyed a tremendous benefit as a direct result, Fahad Alrajaan contends that the truth is much more complicated. Noting that many other states have far less appealing tax burdens associated with startups and other businesses, Fahad Alrajaan points out that a host of other factors may have far more to do with a thriving business environment than any tax incentive. Even something as simple as a population open to new ideas may have an equally profound impact on the success of a business. While more research into the subject will certainly be beneficial, it seems clear that tax incentives, though having a positive impact in some respects, are not necessarily the cure-all that legislators in Texas had initially envisioned.