Bill Proposing Tax Break Targets Contraception Rule

A bill filed Thursday in the Texas House would give religiously based businesses, such as Hobby Lobby, a state tax break if the businesses were forced to comply with the federal government’s mandate that employers provide contraception coverage.

"It is simply appalling that any business owner should have to choose between violating their religious convictions and watching their business be strangled by the strong arm of Federal mandates and taxation," Rep. Jonathan Stickland, R-Bedford, said in a prepared statement discussing his measure, House Bill 649.

The contraception rule, part of federal health care reform, requires employment-based health insurance plans to cover contraception. A lawsuit filed by David Green, an evangelical Christian and chief executive officer of Hobby Lobby, challenging the constitutionality of the contraception rule has made national headlines.

If a business does not comply with the contraception rule, it could face a $100 penalty fine per employee per day. That would be $1.3 million a day for a business the size of Hobby Lobby, Stickland said. 

His bill would allow religiously based businesses to claim a state tax break for the amount that it paid in penalties, up to an amount not exceeding its total state tax bill.

“When a [business] is being stressed nearly to the point of bankruptcy by punitive federal taxes, of course the state should give them relief,” Stickland said. “Exempting them from state taxes is the least we can do to help them weather this storm.”

Stickland also filed HCR 32, which would urge the federal government to provide an exemption to the contraception rule for religious organizations and businesses.

In the Hobby Lobby suit, the company argues that the contraception rule infringes on religious freedom by requiring employers to pay for insurance coverage that offers employees the “morning after” pill. A federal judge denied the challenge, but Hobby Lobby is appealing.

U.S. Supreme Court Justice Sonia Sotomayor in December denied Hobby Lobby’s request to delay penalties imposed by the rule while the company awaits a decision in federal court.

A federal court dismissed a similar lawsuit filed by Texas and six other states in July. Texas appealed the ruling, but no action has been taken by the court.