Senate Finance Committee Chairman Max Baucus has released a detailed proposal for international corporate tax reform, which we summarized earlier this week. While there are some improvements to current law, the proposal...
- The Tax Policy Blog
- Multiple-Choice Tax Proposal in Florida
Multiple-Choice Tax Proposal in Florida
The Florida Taxation and Budget Reform Committee placed an amendment on the upcoming ballot to eliminate the school portion of local property tax. According to one estimate, property owners would save $9.3 billion in 2011. But as the Jacksonville Business Journal reports, not everyone is happy about the measure.
If passed, that part of the amendment would create a shortfall in the state budget. As a result, the proposal also calls for Florida lawmakers to make up the difference through one or more of four options:
• Raise the state sales tax by a penny.
• Eliminate state sales tax exemptions on a host of services such as legal fees, dry cleaning, advertising and haircuts.
• Cut spending.
• Use new or other revenue.
Of the four options, (2) and (3) are preferred. There is no reason for states to favor some transactions over others. This just distorts the price system and causes markets to work less efficiently. And I am sure Florida can trim some fat in the spending area (perhaps from the Department of Citrus?).
Option (4), on the other hand, is the scariest. I have no idea what new or other sources of revenue the fine legislators in Florida might be considering, but I doubt they have sound tax policy in mind.
So is this amendment good, bad, or ugly? Your guess is as good as mine. It really depends on how they counteract the cut. At present, the best we get is a pick-four situation: eeny, meeny, miny, mo.
Buy this blogger a cup of coffee!
Join the Tax Foundation's fight for sound tax policy Go
About the Tax Policy Blog
The Tax Policy Blog is the official weblog of the Tax Foundation, a non-partisan, non-profit research organization that has monitored tax policy at the federal, state and local levels since 1937. Our economists welcome your feedback. If you would like to send an e-mail to the author of a blog post, please click on that person's name to locate his or her e-mail address or visit our staff page here.