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Florida Tax Cut Bill in Stall over Medicaid Expansion Debate

3 min readBy: Scott Drenkard

Florida taxpayers enjoy one of the better taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. systems in the country. The state goes without an individual income taxAn individual income tax (or personal income tax) is levied on the wages, salaries, investments, or other forms of income an individual or household earns. The U.S. imposes a progressive income tax where rates increase with income. The Federal Income Tax was established in 1913 with the ratification of the 16th Amendment. Though barely 100 years old, individual income taxes are the largest source of tax revenue in the U.S. and still manages to maintain corporate, sales, and property taxes near the national average. However, one area where consumers really get it in the neck on taxes is on their cell phone bills.

The good news is that a reduction in the wireless service tax was included in Florida’s $690 million tax cut bill that recently passed the Florida house by 112-3. The rate of the statewide communications services tax would fail from 9.17 percent to 5.57 percent, saving Florida families between $43 and $54 per year. The bad news is that it’s not entirely clear whether the Senate will take up these cuts the House has passed until they can come to conclusions about Medicaid expansion.

From the Tampa Bay Times:

Senate President Andy Gardiner said Wednesday that Senators are ready to cut taxes by more than $800 million, but only if Florida gets back $2.2 billion in Low Income Pool (LIP) funding, the federal program to help hospitals treat poor patients.

"You've got a LIP issue, you have questions regarding (the U.S. Centers for Medicare and Medicaid Services)," Gardiner said. "We hoped we could move forward, but that's a big hole, so we'll just have to wait and see. But the Senate has put itself in a position where we have the tax cuts ready and ultimately we'll have a discussion and go from there."

Relations between the two chambers seem to be disintegrating. Last week, House Appropriations Chair Richard Corcoran, R-Land O'Lakes, said he would go to war against unnamed special interests before expanding Medicaid.

"Come to war with us," Corcoran told House members during a fiery speech in support of the House's $76.2 billion budget. "I'll fight. And if it costs me my political career or yours, so be it."

Regardless of the political battle at play here, it’s good to see wireless taxes at the center of the Florida tax policy debate. We rank Florida as having the 4th highest wireless taxes in the country, coming in at 22.38 percent when accounting for all levels of government that levy taxes on wireless services.

Wireless taxes have a tendency to be hefty because they are levied by so many jurisdictions—federal, state, county, municipal, sometimes even special districts. But there is really no reason cell services should get taxed at anything higher than the general sales taxA sales tax is levied on retail sales of goods and services and, ideally, should apply to all final consumption with few exemptions. Many governments exempt goods like groceries; base broadening, such as including groceries, could keep rates lower. A sales tax should exempt business-to-business transactions which, when taxed, cause tax pyramiding. rate.

Our research also shows that cell phone taxes are disproportionately borne by lower income families, restricting access to wireless services that are associated with economic success. So while Florida has a good tax climate already, these are still taxes worth cutting.

More on Florida.

P.S.—The bill also includes dozens of other tax reductions, some good and some bad: sales tax exemptions for college textbooks, certain agricultural equipment, and gun club memberships, a property tax exemptionA tax exemption excludes certain income, revenue, or even taxpayers from tax altogether. For example, nonprofits that fulfill certain requirements are granted tax-exempt status by the Internal Revenue Service (IRS), preventing them from having to pay income tax. increase for widows and widowers and the blind and disabled, a sales tax holidayA sales tax holiday is a period of time when selected goods are exempted from state (and sometimes local) sales taxes. Such holidays have become an annual event in many states, with exemptions for such targeted products as back-to-school supplies, clothing, computers, hurricane preparedness supplies, and more. for back to school purchases, and more.

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