Florida’s Tax Possibilities

On SBE Council’s “Business Tax Index 2008,” Florida’s tax system ranks an excellent fifth in the nation. That is, it is fifth best in terms of tax costs imposed on entrepreneurship and small business.

Florida benefits most from no personal income and individual capital gains taxes. In addition, its unemployment tax is low. Of course, there are some negatives as well, including high fuel taxes.

Besides, when it comes to taxes, there’s always room for improvement. Two major tax issues were being considered for the November ballot. One measure would have placed a Taxpayers Bill of Rights, or TABOR, on the ballot limiting government revenue growth to population and inflation. The second would present at least a partial tax shift, eliminating school property taxes in favor of reduced spending and expanded consumption taxes.

The Orlando Sentinel reported the following on April 15:

A powerful tax-reform panel couldn't muster the two-thirds majority needed to place the "Taxpayers Bill of Rights," or TABOR, on the November ballot. TABOR links the revenue growth of state and local governments to population and inflation. The Taxation and Budget Reform Commission spent nearly five hours debating and tweaking the plan Monday. Finally, a weakened version that only would have required a super-majority vote for local governments to raise taxes failed 14-9.

The amendment needed 17 votes on the 25-member panel…

Meanwhile, trouble was mounting for an amendment that has already passed the panel. It eliminates about $9.5 billion in property taxes that now finance schools and requires the Legislature to make up the money through spending cuts, a penny sales-tax increase and an end to tax exemptions on goods and services.

But at least one commissioner who voted to pass the so-called tax swap last month said Monday he has changed his mind. Duval County tax collector Mike Hogan, who was part of the 21-vote majority for the measure, said he had thought it meant lawmakers would be free to use a 2- or 3-cent sales-tax increase. The commission's Style and Drafting committee has since "clarified" the plan, which mandates that lawmakers couldn't raise the sales tax by more than a penny.

Hogan said that would mean lawmakers would have to impose a sales tax on services — everything from lawn care and dry cleaning to lawyers' and accountants' bills — to generate enough money. "There's no question I'm changing my vote," Hogan said. "It forces a tax on services."

TABOR makes sense, but unfortunately will not be on the ballot. Meanwhile, the property tax measure offers a fascinating opportunity to debate the plusses and minuses of taxing property versus taxing consumption.