Last Friday, the Florida Senate unanimously approved HJR 1003, a proposal to raise the state’s personal 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. from $25,000 to $50,000. The measure, which is a constitutional amendment, will now be given to Florida taxpayers, who will need to approve the measure by a 60 percent margin in order for the 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. cut to take effect.
As I argued in my testimony to the Finance and Tax Committee of the Florida House of Representatives, the tangible personal property taxA property tax is primarily levied on immovable property like land and buildings, as well as on tangible personal property that is movable, like vehicles and equipment. Property taxes are the single largest source of state and local revenue in the U.S. and help fund schools, roads, police, and other services. is an especially destructive way of collecting tax revenue, as it distorts business decisions relating to the accumulation of capital.
Each year, all business property (machinery, office contents, etc.) is subject to an ad valorem tax based on its depreciated value. Not only are there complexity concerns with properly accounting and depreciating these business inputs (look at the form here), the tax also places a disincentive on the accumulation of new capital—it punishes businesses that employ new and innovative technologies in their production methods.
Raising the exemption from $25,000 to $50,000 would mean that nearly half of current TPP tax filers will no longer be required to file this cumbersome and distortionary tax.
More on Florida’s tangible personal property tax here.
More on Florida here.
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