As Texans head to the polls on Nov. 4, one little-noticed ballot measure could quietly reshape the state’s financial future. Proposition 6 would amend the Texas Constitution to permanently ban taxes on securities transactions and occupation taxes on registered market operators. This would make Texas the only state in the US with a constitutional ban on securities-transfer taxes.
That may sound redundant—Texas doesn’t tax stock trades now—but that’s the point. The measure is part of a broader campaign to make the state an irresistible destination for the traders, brokerages, and institutional investors the Texas Stock Exchange hopes to attract with its lighter regulatory and tax touch.
To understand the amendment’s stakes, it helps to look at what Texas already does—or doesn’t—tax.
Texas has long branded itself as business-friendly territory. There’s no personal income tax, no corporate income tax in the traditional sense, and no capital-gains tax at the state level. Voters will also see a companion measure on the November ballot—Proposition 2, which would make Texas’ ban on capital-gains taxes permanent, further insulating investment income from future legislatures.
Instead, businesses pay a franchise tax under Chapter 171 of Texas’ state tax code.
That franchise tax is modest by national standards: Most entities pay 0.75% of taxable margin (gross revenue minus certain deductions) and 0.375% for retailers and wholesalers. Many small entities owe nothing.
For companies simply doing business in Texas but incorporated elsewhere, the tax applies only to Texas-sourced receipts. For those incorporated in Texas, the exposure is similar, but the administrative friction is lower. Crucially, Texas doesn’t pile on the corporate fees, franchise surcharges, or annual report levies that many states use as stealth revenue.
Texas already offers a low-burden environment for headquarters, holding companies, and financial-services operations. Proposition 6 doubles down by constitutionally ensuring that legislators can’t fill budget gaps by taxing trading activity or exchange revenues.
House Joint Resolution 4, the measure behind Proposition 6, would add a new section to Article VIII of the Texas Constitution effectively prohibiting the state from ever imposing a tax on stock exchanges, clearing agencies, or trading platforms. Critics, including major newspaper editorial boards, argue that it’s unnecessary and would limit future fiscal flexibility.
But to backers, that’s why now is the perfect time. The amendment functions as a binding promise to investors and exchange sponsors that the state’s tax policy will remain frozen in place. By locking in the advantage, Texas is extending an open invitation to exchanges, broker-dealers, and issuers weary of high fees and political volatility in other jurisdictions.
Proposition 6 isn’t a standalone curiosity. It’s one piece of an emerging ecosystem anchored by the Texas Stock Exchange, which received approval last month from the Securities and Exchange Commission to operate as a national exchange. TXSE Group Inc., based in Dallas, plans to begin trading in 2026.
Its backers—including major private-equity firms and financial heavyweights—describe it as a “premium, issuer-friendly” platform designed to reduce compliance friction and offer alternatives to NYSE and Nasdaq listings.
Gov. Greg Abbott (R) hailed the SEC approval as evidence that “Texas is swiftly becoming America’s financial hub.” The state’s leadership has since moved to reinforce that message with legal and fiscal scaffolding.
One pillar is Senate Bill 1058, passed in May. It amends the franchise-tax statute to exclude from taxable revenue any trading rebates that an exchange pays to brokers or dealers. The new law ensures that the rebates are tax-neutral, allowing the exchange to pay out incentives without inflating its taxable base. Only the exchange benefits—brokers must still treat rebate income as taxable—making the carve-out a precise subsidy for the exchange operator.
Taken together, the constitutional amendment and statutory carve-out amount to a coordinated strategy: Eliminate future tax risk, lighten current burdens, and build a regulatory moat around Texas’ new exchange ventures.
The savings compared with legacy venues are striking. A large Delaware-chartered corporation can pay over $200,000 annually in franchise taxes plus report fees, while a comparable Texas entity faces at most a 0.75% margins tax—and often far less. Even modest mid-cap firms can trim six figures a year simply by chartering in Texas rather than Delaware.
On the capital-markets side, the New York Stock Exchange and Nasdaq charge initial listing fees that can reach $295,000 and annual fees up to $745,000. TXSE hasn’t finalized its schedule, but insiders expect rates 30% to 50% lower, aided by rebate structures that are now state-tax-exempt under SB 1058. That means both issuers and the exchange keep more of what they earn—a powerful draw for CFOs doing long-term cost modeling.
The approach mirrors the broader playbook Texas has used to attract relocations: Codify predictability, minimize friction, and market the absence of taxes as a competitive advantage. If voters approve Proposition 6, Texas will be able to tell potential issuers and exchange operators that its favorable regime isn’t just statutory but constitutionally entrenched. That permanence matters for entities that must model tax and regulatory exposure over decades.
For general counsel and compliance officers, the shift is more than a political curiosity. It introduces new strategic questions.
Should Texas-based or energy-heavy issuers consider dual listing on TXSE? If so, how will disclosure, audit, and governance obligations differ from NYSE or Nasdaq standards?
If Texas continues to strengthen its corporate code and court infrastructure, will companies start to incorporate rather than merely operate there—especially given comparable legal protections and lower fees? With exchanges and business courts proliferating, in-house counsel must track divergent procedural rules and enforcement patterns that may depart from Delaware orthodoxy and assess whether their client should consider incorporating elsewhere.
A bigger question is whether tax certainty alone can create liquidity. Exchanges live or die by trading volume, and liquidity tends to follow incumbents—an effect the SEC once described as “liquidity attracting liquidity.”
While there’s been no organized opposition campaign, Proposition 6 has attracted visible support from the Texas Stock Exchange and Nasdaq, which see the measure as codifying Texas’s pro-market posture.
The state’s gamble is unmistakable. By constitutionally entrenching its pro-market posture, Texas is betting that predictability is the new subsidy. If the strategy works, TXSE’s launch next year could mark the birth of what locals half-jokingly call “Y’all Street” —a capital markets hub built on statutory insulation and low taxes.
This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.
Author Information
Carliss Chatman is a professor at SMU Dedman School of Law. She writes on corporate governance, contract law, race, and economic justice.
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