Florida Moves Towards Property Tax Cuts (Again)

October 23, 2007

The Florida House yesterday passed by an almost unanimous margin a bill that would put a property tax cut on the ballot in January. The Senate has a scaled down version. Details from the Sun-Sentinel:

Facing deadline pressure, the Florida House passed a reworked property tax-cut plan with overwhelming bipartisan support on Monday, setting up a showdown of dueling multibillion dollar tax-cut packages from the Legislature’s two chambers.

The House’s $11 billion package spreads some of the benefits to non-homestead property owners, who got clobbered by the run-up in real estate values, and ties a new homestead exemption to home values in each county, a move in part designed to provide bigger breaks to affluent areas such as South Florida.

“Of all the bills we’ve considered, this is the one that has something for everybody,” said House Speaker Marco Rubio, R-West Miami. “It targets the relief to people who need it the most.” The House’s 108-2 vote moves the negotiations into a new phase: Behind-the-scenes talks between a few top lawmakers in the House and Senate, with a looming Monday deadline to agree on a tax-cut solution. The issue’s fate is far from clear. As the House approved its plan, state senators were conspicuously absent from the Capitol.

Having passed a very different plan last week, senators are due back in Tallahassee on Thursday at the earliest, if at all, with the Senate showing little appetite to consider major changes made by the House to a compromise worked out weeks ago.

Legislators are meeting in emergency session – their fourth special session of the year – after a Tallahassee-area judge threw out a previous property tax amendment on the grounds that it was misleading and confusing.

“Targeted tax relief” should typically be met with skepticism. Unless you have targeted tax policies in the first place that charge different rates to different people, then targeted tax relief is typically just a system of political gimmicks.

The Florida legislature should first make sure that any tax cut can be paid for. In other words, unless the state is running a surplus, it needs to also cut spending if it wants to pass a property tax cut. Otherwise, it needs to come to the reality that significant property tax relief is likely to lead to an increase in the sales tax rate (already above the national median) or Florida will end up getting an income tax with more control over government functions being done in Tallahassee rather than in local governments. This fact cannot be stressed enough: there is no such thing as a free lunch.

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A 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.