Texas lawmakers are to be commended for cutting the business-unfriendly franchise tax and making it easier for smaller business to comply. That’s a great start. Eventually, legislators should abolish the tax entirely.

“The Texas Senate late Sunday approved cutting the franchise tax on businesses by 25 percent,” the AustinAmerican-Statesman reports. “House Bill 32 also would allow businesses with less than $20 million in annual revenue to use an easier computation system and lower tax rate — up from $10 million in revenue under current law. The legislation would cut that ‘E-Z’ tax rate by 40 percent.”

Texas is already responsible for most of the job growth since the Great Recession — by some calculations, it’s responsible for all of the net job growth.

According to the American Enterprise Institute, “It’s a pretty impressive story of how job creation in just one state — Texas — is solely responsible for the 1.169 million net increase in total U.S. employment. … The other 49 states and the District of Columbia together employ about 275,000 fewer Americans than at the start of the recession seven years ago, while the Lone Star State has added more than 1.25 million payroll jobs and more than 190,000 non-payroll jobs (primarily self-employed and farm workers).”

But there’s clear evidence that the franchise tax kept those numbers lower than they should have been. For one thing, the franchise tax is a tax on gross receipts — not profits. That means companies pay it, even if they’re losing money.

Gov. Greg Abbott called for a cut in the franchise tax last month.

“Every dollar paid in business franchise taxes could instead be invested in higher wages or new jobs,” Abbott pointed out in an American-Statesman op-ed piece. “Texas must promote smarter tax policies that energize the Texas economy by driving down the cost of doing business.”

One such policy is cutting the franchise tax, he wrote.

“This reduction in the franchise tax will help attract even more job creators and encourage even more Texas entrepreneurs to invest their capital in opening or growing a business,” Abbott wrote. “These tax savings will also be passed on to Texas families in the form of lower consumer prices and to employees in new jobs and higher wages.”

The savings could be significant; according to a study released in March by the Texas Public Policy Foundation, Texans would save billions of dollars. Personal income would increase $10.8 billion after the first year, according to the TPPF.

The TPPF applauds the Legislature’s vote.

“Though businesses pay this tax directly, individuals suffer the consequences of this tax through the form of higher prices, lower wages, and fewer jobs available,” says TPPF economist Vance Ginn. Though our research and others show that the best economic policy is to eliminate this tax, a 25 percent cut along with the increase in the ceiling to file the EZ form is a terrific combination to reduce the burdens of paying and complying with the tax.”

The next step, of course, is abolishing it altogether.