On July 14th, the IRS held a public hearing for the debt-equity rule (section 385 of the IRS code) that the Treasury Department proposed last April. The hearing, which had as many as 16 speakers from various industries,...
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Florida Governor's Budget Proposal Addresses Shortfall Without Raising Taxes
Last week, Florida Governor Rick Scott proposed his 2012/2013 budget. Scott was forced to design his plan knowing he needed to address a $2 billion shortfall. The proposal addresses this shortfall by cutting the budget by 4.6 percent and has the benefit not raising taxes.
Scott proposes what the budget's website refers to as "small business tax reform." This reform includes:
1. Exempting business income under $50,000.
2. Exempting tangible property valued at less than $25,000.
3. Cutting the state's productivity increase requirement in half, making it easier for businesses to qualify for its machinery and equipment sales tax exemption.
The $2 billion budget shortfall is addressed by cutting spending in several areas. State spending is reduced by:
1. Cutting 2,800 currently-filled state jobs.
2. Trimming prison costs.
3. Slashing state Medicaid expenditures by 10 percent ($2 billion).
Meanwhile, education is the recipient of $1 billion in increased spending over the 2011/2012 budget. Though this increase will not bring education spending back to 2010/2011 levels, many Floridians consider it a victory.
Although it is doubtful that everyone in the Sunshine State is happy with the budget proposal, what it accomplishes is no small task. Addressing a $2 billion state shortfall without increasing taxes sets a realistic model for other states that seek to remedy budgetary woes while simultaneously trying to remain economically competitive.
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