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Crist Fails Florida With Tax Plan That Creates Second-Class Citizens
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Published: October 31, 2007
The Legislature is giving the state a bad choice: Either vote for a tax reform that is small and broadly unhelpful, or get no reform at all.
Voters should reject the anemic tax-reform solution that lawmakers passed Monday in Tallahassee and force the Legislature to do better, much better.
If 60 percent of voters do say yes to the confusing package of changes on Jan. 29, the typical homeowner will save only about $20 a month. Businesses will save a little more or perhaps nothing.
Some longtime homeowners who move will save a bundle because a provision would allow the Save Our Homes tax cap to travel along with them. But that feature, called portability, will expand the shameful inequities between longtime homeowners and the overcharged owners of new homes, whose taxes may be four or five times greater than their neighbors'.
Lawmakers cannot explain why someone buying a first home - or moving here from out of state - should be forced to pay radically higher taxes than someone who trades up into a much more expensive residence. Instead of addressing the inequities, they followed Gov. Charlie Crist's simplistic advice to make matters worse. Eventually, a judge is likely to rule that the inequities are so great that they are unconstitutional, and kill the Save Our Homes amendment altogether.
Under existing law, at least everyone who buys a new home is treated the same. Under the proposed version of portability, homesteaders can transfer up to $500,000 of sheltered value to a new property.
This change promises a longtime homesteader who downsizes a virtually tax-free retirement, while grandchildren buying their first home could be taxed to death.
If leaders really wanted to get the real estate market moving again, they'd quit treating newcomers like second-class citizens who must supplement their neighbors' taxes. The word is out that Florida soaks newcomers, which is why more moving vans are leaving the state than heading here. The lawmakers' so-called fix will do nothing to address this problem.
Every homeowner would benefit from the plan's doubling of the state's $25,000 homestead exemption. But the bigger exemption does not include school taxes, which can be more than half of a tax bill.
The catch here is that lawmakers promised to help out low-value regions with their revenue losses. That means sending revenue from counties like Hillsborough to small counties. We don't know where Hillsborough and Tampa, already forced to lay off workers, will find extra money to share.
Besides newcomers and people who bought their homes during the run-up of property values, the biggest losers in the new plan are businesses and renters. Commercial properties should fight the proposal because it will gradually shift the tax load away from homes and onto their businesses, which already pay more than a fair share of the costs of schools and local governments.
Businesses were offered a $25,000 exemption on their tangible personal property and a cap of 10 percent a year on increases in taxable value. Ten percent is far above typical yearly increases in value, but lawmakers are telling business a little something is better than nothing.
That's just not true. Florida Tax Watch, a nonpartisan watchdog group, correctly sums up the situation: 'It is extremely important to acknowledge that by providing more benefits to homesteaders and attempting to fix problems Save Our Homes created for them, it makes it much more difficult to create a future constitutional amendment to help non-homestead property that would garner enough voter support to pass.'
In other words, key aspects of this deal will be all but impossible to change once enacted, just as it's politically impossible to change the Save Our Homes cap today.
The reform package was thrown together so quickly that lawmakers voted without knowing all the implications. They rushed to meet a self-imposed deadline of getting something - anything - on the January ballot.
A plan proposed by the House, in many ways preferable to the Senate plan, never had a chance. The Senate offered its own version and like a bully, refused to negotiate. Unfortunately, the House leadership - if you can call it that - rolled over.
Republican Rep. Alan Hays of Umatilla said that being forced to pass the Senate version was like taking medicine 'in the form of a suppository.'
Unlike a suppository, this medicine will swell up, not dissolve. Voters should not bend over and accept it. They should stand tall and demand reforms that help the taxpayers most in need of help.
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