The Florida Tax Swap

[Normy]

This fall, those of us in Florida are apparently going to get a chance to vote on a measure that would cut the school-portion of property taxes by approximately 25%, while raising the state sales tax 1 cent to 7%. This new sales tax would also cover a lot of services that are now not required to collect sales tax. I think I am for this measure, so long as it doesn't include 1. rent, and 2. basic food stuffs sold at grocery stores.

[Note: I pay approximately $9000 per year in property tax on my house in Fort Lauderdale; I don't know how much extra sales tax this measure would cost me each year, but I suspect that it would be less than the $2250 that I would probably save.]

This measure seems on the surface to be a far fairer system of state taxation than the current system. True, the big payers right now are people with big houses, but these people also spend a lot of money on toys [take a walk down Los Olas boulevard some Friday evening and you'll count more Bentleys than Buicks.....], and there are a whole lot of people in my town who DON'T live in extraordinary houses but who ARE paying extraordinary property taxes....just because they bought during the price boom at the beginning of this decade.

Thoughts on this method of taxation?

N

Here's a cut-n-paste of the article, from the Sun-Sentinel:

"TALLAHASSEE - Florida voters will decide in November on a ballot measure that would cut property taxes across the board by an average of 25 percent, or $9.5 billion, while directing state legislators to replace the revenue by raising sales and other taxes.

Opponents said the amendment would almost certainly lead to a sales tax on services — everything from dry cleaning to legal fees — similar to one that was withdrawn after a huge public outcry more than 20 years ago.

But the Taxation and Budget Reform Commission shrugged off the criticism, voting 18-7 Thursday to stand by the plan commissioners first approved last month to require that school property taxes be cut by $9.5 billion by 2010.

"I know it's not a perfect product, but in my eight years in the Legislature, I never flipped on a vote and I'm not going to start now," said commission Chairman Allan Bense, a former House speaker from Panama City.


The move came over the objections of business lobbying groups, who threatened to sue to block it, and some legislators who argued it would lead to a huge tax increase.

"This will kill off government," said Commissioner Randy Miller, director of the Florida Retail Federation.

But Commissioner John McKay, who has fought for years to try to repeal some of the hundreds of sales-tax exemptions in state law, said legislators could find the money by revising and reforming the tax code. "It won't be difficult at all," he said.

If 60 percent of voters agreed, the amendment would require the Legislature to do away with the portion of school property taxes districts must collect to draw state dollars, called "required local effort." The resulting tax cut would apply not just to homeowners but to businesses, second homes and commercial buildings.

Legislators would be required to replace the schools revenue by some combination of raising the sales tax a penny, closing sales-tax exemptions given to a wave of different industries, cutting spending or finding "other revenues." It would also replace put a 5 percent cap on assessment growth for non-homestead properties — businesses and second homes — similar to the 3 percent Save Our Homes cap enjoyed by homeowners. The Amendment 1 property tax cuts that voters approved last January has provided for a 10-percent cap.

Critics say the tax-swap amendment actually mandates a net tax increase because the education spending that would have to be replaced is closer to $11 billion, thanks to other language that requires a 7.5-percent increase in K-12 spending in each of the next two years.

Barney Bishop, president of Associated Industries of Florida, which represents most of the state's large companies, said he's "99 percent certain there will be a legal challenge" to try to block it from the ballot.

Business groups had hinted the measure was ripe for a suit while lobbying against it.

"This is the biggest scam since the Florida lottery," Bishop said. "This is being sold as a decrease of taxes when, who knows what it'll be?"

Sen. Mike Haridopolos, R-Indialantic, chairman of the Finance and Tax Committee, is slated to become Senate president in 2010. He has launched a Web site arguing the amendment would force a tax increase because of the mandated school funding increase.

Haridopolos said Thursday that the Legislature's lawyers would be looking at the amendment and considering legal action. "I think there's a lot of constitutional questions," he said.

The tax commission is a constitutionally created body that can meet every 20 years and can make proposals directly to the voters to amend the constitution or budget

The amendment had passed the commission 21-4 on March 17. But several commissioners subsequently backed away, citing confusion over whether its language limited legislators to a one-cent increase in the sales tax.

Other supporters — including House Speaker Marco Rubio, R- West Miami — backed away after the commission failed to pass a strict revenue cap on state and local governments that supporters had touted as a necessary companion measure.

Ultimately, the amendment got one more vote than the 17 it needed, with several commissioners saying they couldn't ignore the pleas of stressed property owners they'd heard from at hearings over the last year.

"We owe it to our children to find another stable source of revenue for our schools," said Commissioner Nancy Riley, a Clearwater real estate broker. "This will force the Legislature to address where they will get the money." But another commissioner, Susan Story, switched her vote to 'no,' saying she was worried that the amendment could force a services tax. She also said she was concerned after watching lawmakers struggle this year to close a $5 billion budget shortfall.

"I did vote for this the first time... but I have always been concerned about a services tax," said Story, a corporate executive with Gulf Power Co., who said such taxes would "destroy small businesses in this state." The commission also sent five other amendments to the ballot, including one to strike the state's century-old ban on funding religious institutions and amendments to give property tax breaks to owners of conservation lands, working waterfronts and homeowners who weatherize their homes or put in solar panels.

The panel delayed until today a final vote on amendments that would undo the Florida Supreme Court's 2006 decision invalidating Gov. Jeb Bush's school voucher program and mandating that 65 percent of school funding go for classroom expenses."

[K.B.]

We did this in Michigan. It didn't work.

[id10t]

I work in education in Fl (community college) and I have a kid in pre-school and a 2nd grader.

I'm very much against this. I don't mind increasing the amount of homestead that is non-taxed, esp. for elderly and folks like me (single income family). However, a direct cut to the education budget - even if it only affected CCs and state colleges - is the wrong thing to do.

Our current year budget (7/1/07-6/30/08) was already cut by 6%, and that was *after* we were told we have the money. If I'm really lucky, I may get a token raise this year, but probably not (if I do, I'll bet on 2%). 83% of the budget where I work is payroll and associated....

I think that what needs to happen is a stop to waste of the money we do have. A change in the purchasing and budgeting process that will not force spending money just so it stays in the budget the following year.

Also stopping waste at other levels. Why are so many state/county/city vehicles allowed to be driven home?

Additionally, one last thing I'd really like to see is a requirement of tax notice and price breakdown at the gas pump. Store cost of gas (not whole sale, but what they'd sell for) = ?? + this tax @ 1.2c/g + that tax at 2.7c/g, etc. Just so people can be informed and know what taxes they are paying, etc.

[Racerbvd]

Additionally, one last thing I'd really like to see is a requirement of tax notice and price breakdown at the gas pump. Store cost of gas (not whole sale, but what they'd sell for) = ?? + this tax @ 1.2c/g + that tax at 2.7c/g, etc. Just so people can be informed and know what taxes they are paying, etc.

Some pumps use to have that break down, but I haven't seen that for a while.

[red-beard]

Consumption taxes are the way to go.