Texas Supreme Court Strikes Down Business Tax Challenge

AUSTIN, Texas (AP) _ The Texas Supreme Court has struck down a constitutional challenge to the state’s business tax in a case that threatened a major impact on the state budget.

The all-Republican court ruled Monday that the tax created in 2006 does not violate the state ban on personal income taxes without voter approval.

Boerne-based insurance adjuster Allcat Claims Service LP challenged the tax a personal income tax when applied to certain business partnerships.

The business tax, also known as the margins tax, is a key source of money for public education even though it has raised far less revenue that projected. It raises more than $4 billion per year.

Texas has had a constitutional ban on a personal income tax without voter approval since 1993.

(Copyright 2011 by The Associated Press.  All Rights Reserved.)

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