WordNet
n. a tax that is imposed by states on corporations; it depends both on the net worth of the corporation and on its net income attributable to activities within the state
Wikipedia
A franchise tax is a government levy (tax) charged by some US states to certain business organizations such as corporations and partnerships with a nexus in the state. A franchise tax is not based on income. Rather, the typical franchise tax calculation is based on the net worth of or capital held by the entity.
The state of Delaware has a significant franchise tax, while other states, such as Nevada, have none at all or a smaller one. States with higher corporate income taxes usually have low or no franchise taxes and vice versa. Thus in the case of Delaware, it has no corporate income tax for companies that are listed as operating outside the state, however, Delaware's franchise tax rate is substantially higher than those in other states.
Usage examples of "franchise tax".
There was a residential sublet, an employment agreement, written interrogatories for a bankruptcy, a form for the Franchise Tax Board, and two drafted letters threatening lawsuits on behalf of his clients—.
There was a residential sublet, an employment agreement, written interrogatories for a bankruptcy, a form for the Franchise Tax Board, and two drafted letters threatening lawsuits on behalf of his clientsone for an artist against a gallery refusing to return his unsold paintings, and one for George Morton's mistress, who claimed that the parking attendant at Sushi Roku had scratched her Mercedes convertible while parking it.
Hence, his tangle with the Internal Revenue Service and the State of California Franchise Tax Board.