Voters Must Help Straighten Florida's Twisted Tax Structure

Published: Oct 7, 2007

It's time to stop playing games with Florida taxpayers. Offer them clear choices and they'll vote for the fair, modern tax system the state deserves.

One game is the Legislature's current attempt to patch over inequities in property-tax laws by hiding from voters the loss of the Save Our Homes tax cap for new buyers. A judge was right to kick the question off the ballot. What will happen next is uncertain because lawmakers can't decide if they dare risk telling voters the truth.

Even if the proposed "super" homestead exemption is rewritten and approved by voters, additional reform will remain essential. Florida tax laws are in such a mess that they're hurting the state's economy.

Snowbirds can be taxed at 10 times the rate of their permanent neighbors; they're mad and couldn't be blamed for flying away for good.

Descendents of the state's pioneers are trapped in their historic homes by the enormous tax increase they would face if they moved. Newcomers are shocked by the unfair share of property taxes they are required to pay on newly purchased homes. Talented workers are turning down chances to relocate to Florida when they find out how high their tax and insurance bills will be.

Beloved waterfront restaurants and motels are hit with unaffordable tax increases if an upscale project pops up nearby.

Sales tax exemptions are so unclear that veteran cashiers can't explain what's taxed and what isn't. Florida allows mail-order sales to go almost entirely untaxed, giving out-of-state Internet sellers an advantage over Florida businesses.

A 10-mill cap on local property tax rates has encouraged the formation of multiple taxing districts only indirectly accountable to taxpayers and whose revenue increases automatically along with property values.

The state can and must do better.

Best Hope For Reform

The best hope for comprehensive change lies in the Tax and Budget Reform Commission, now holding public meetings around the state. Next year the committee will decide what reforms to push. By majority vote it can make recommendations to the Legislature; by a two-thirds vote the committee can put an issue directly on the November 2008 ballot.

A deliberative panel is the best forum to negotiate sensible compromises. Tax laws have too often been finalized in a rush at the end of lawmaking sessions, when, as Chairman Allan Bense told us, "People who didn't have lobbyists there at 2 a.m. got nailed."

So many topics are on the agenda that Bense, a former speaker of the House from Panama City, will be challenged to get the group focused on top priorities.

The main source of local revenue is the property tax, and it is the primary source of taxpayer displeasure.

Voters in 1992, distressed about rising taxes, passed the Save Our Homes amendment. It limits the increase in taxable value of an owner-occupied home to 3 percent a year. The amendment steadily shifted the tax burden to uncapped businesses, rental properties, second homes, and new purchases. It has, as we warned 15 years ago, led to astonishing inequities.

How to lessen the damage is a big part of the panel's challenge. As Bense observes, "You cannot take away Save Our Homes. We have to be realists."

Many interesting proposals have been floated - property-tax caps for businesses; bigger exemptions for homeowners; new shelters for landlords; portable tax breaks; and a broader sales tax that would replace property taxes.

Help also must be directed to cherished old businesses facing death by taxes. We have suggested a heritage exemption that provides a tax cap for small operations. Without protection, rising values in prime locations make the future bleak for many motels and sandwich shops.

Only when Florida's leaders regain control of their tax machine will it stop pulling the state where its residents don't want to go.

Change is possible. Hillsborough Property Appraiser Rob Turner, among others, offers a balanced package of reforms that would phase in tax equity without shocking taxpayers or the economy. But no reform will happen until the state's leaders stop handing big breaks to selected groups while silently nailing others.

Losers And Winners

The single biggest flaw in Florida tax law is the free ride it gives some and the back-breaking load it piles on others.

Wiping the slate clean and starting over is tempting, as House Speaker Marco Rubio of Miami proposed last spring. He wanted to increase the sales tax high enough to eliminate property taxes. But he couldn't explain how to fairly share the revenue among the state, counties and property-taxing districts, all with different priorities and different tax rates.

Bense's panel should not gloss over the details, nor should it buy temporary solutions that mortgage the future.

Gov. Charlie Crist is thinking about selling state assets, including the Lottery, highways and bridges. The tax panel should expose the total cost of such sell-outs. Future taxpayers would be stuck paying higher tolls and be bombarded with gambling ads while future revenue flowed to foreign investors.

Most taxpayers are telling the panel simply that taxes are too high. That complaint only scratches the surface of what's wrong. Taxes for many of us are quite fair and stable, while for others they are crushingly high and unpredictable. Until balance and justice are restored, Florida cannot realize its economic and social potential.