With a vote looming on an Illinois bill (HB 689) that would impose a graduated income tax with a top rate of 11.25 percent on pass-through businesses (previous coverage here and here), the Illinois Department of Revenue...
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- Spurred by Tax Foundation Testimony, FL House Moves to Re...
Spurred by Tax Foundation Testimony, FL House Moves to Reduce Personal Property Taxes
Back in February, I gave testimony to the Finance and Tax Committee of the Florida House of Representatives regarding HJR 1003, a proposed amendment to the Florida Constitution that would raise the exemption level of Florida's tangible personal property tax. On March 2, the Florida House approved the resolution.
Florida's tangible personal property tax is an arcane business tax that is levied yearly on personal property ranging from office supplies to machinery. It requires that business-owners pay an annual rate on the depreciated value of all products that they use in their offices and factories. Taxes like these distort business activity, as they create a disincentive for businesses to buy efficiency-enhancing machinery, and the compliance costs of filling out all forms required to properly account for and depreciate mundane objects like desk chairs and computers is unnecessarily complex.
I was pleased to hear that the Florida House nearly unanimously (112 to 2) approved the resolution, which is headed to the Senate this week, and will likely be considered before Friday. If the resolution passes the Senate and is approved by 60 percent of Florida voters in November, it would:
- Raise the exemption of Florida's personal property tax from $25,000 to $50,000; making it so nearly half of the 317,000 businesses currently paying the tax would no longer have to file.
- Give local governments leeway to increase the exemption in their localities, promoting intra-state competitiveness.
As I argued in my testimony, the end goal of this process should be the total removal of the tangible personal property tax, not an institutionalized two-tier exemption system that treats big firms differently than small firms. With that said, the resolution is a step in the right direction, and raising the exemption reduces the compliance burden of this tax and paves the way for a complete removal in the long run. I'll be sure to provide updates as the bill moves through the Senate.
More on Florida here.
Follow Scott Drenkard on Twitter @ScottDrenkard.
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