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If Voters Kill Tax Amendment True Reform Will Be Revived

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The Tampa Tribune

Published: January 14, 2008

The tax changes on the ballot with the presidential primary are a stew of legislative leftovers sure to give the state heartburn.

Taxpayers should vote no.

Elected officials last year lacked the courage to reform a tax system that grows more unfair and economically damaging each year. But at the last minute in special session, they pulled together a hash of changes, combined them in a pot called Amendment One, and now expect taxpayers on Jan. 29 to hold their noses and swallow them all.

Instead, voters should read the 500-word amendment and consider the damage it will do, not just how it might lower their own tax bill. Thinking voters will never give the complicated measure the 60 percent tally it needs to pass.

The amendment would increase the inequities of the present system and by doing that, would splinter future support for true reform. Its one-sided approach to tax cuts is unsuitable for a state now taxing some folks half to death and leaving others only halfway taxed.

Proponents of the change, including Gov. Charlie Crist, hope voters take a narrow view: "If you want your property taxes cut, then vote yes on Amendment One," he urges.

If you want a tax system the state can be proud of, vote no and demand better.

A Useless Cap

Businesses and owners of other non-homestead property should be insulted with the offer of a 10 percent annual cap in taxable value. That cap is so high it would be useless for most properties in most years.

First-time buyers of homes should be furious. They would continue to be heavily penalized for no reason.

The change would increase the homestead exemption, but not by the widely advertised $25,000. School taxes are excluded, so the break is really only 60 to 65 percent as large as it seems. And it only applies to values between $50,000 and $75,000, a quirk sure to bewilder property owners in low-value neighborhoods. Properties worth $50,000 or less, and there are thousands of them, would see no immediate benefit.

The major selling-point of the amendment is a feature called portability. And portability is its biggest flaw.

Under this change, a tax shelter accumulated under the longtime Save Our Homes cap, up to a value of $500,000, could be switched to a different property. That could equal a tax savings of more than $10,000 a year.

Here's how it would work: The owner of a home assessed at $200,000 but with a real value of $300,000 could transfer the difference, $100,000, to a new, more expensive home. If you move into a home of lesser value, you could only transfer the same percentage savings you previously enjoyed.

The goal is to stimulate the housing market while appeasing a politically powerful group of voters.

Many people do feel trapped in their homes by their own low tax bills. But thoughtful voters will understand this change fixes the wrong side of the problem. Someone just entering the Florida housing market will still face taxes dramatically higher than neighbors pay. The change creates an incentive to sell but no incentive for people without tax shelters to buy.

If Save Our Homes becomes movable, the state will have created a privileged class of landowners who will be subsidized by their neighbors for the rest of their lives, no matter where they move. It may well prove unconstitutional and will brand Florida as an unfriendly destination.

If you moved last year you qualify for retroactive portability. But to folks who moved in 2006 at the peak of the housing bubble, the Legislature has one word: Sorry. Your tax shelter won't follow you. And, if you sell your house and can't buy another within two years, your tax-cap savings will vanish and can never be reclaimed.

In financial emergencies that force people to sell homes, such as divorces or layoffs, Save Our Homes proves itself a sham. If you must rent for longer than two years, Florida brands you unworthy of keeping the tax break. The more financially stable you are, the safer your fat tax shelter.

Misleading Critics

The loudest opposition to the amendment comes from policemen, firefighters and teachers who warn of budget cuts so deep that public safety and education will suffer. Taxpayers should listen, but be skeptical. Tax reduction is driven by the growing imbalance between paychecks and tax bills. Property taxes have doubled over a six-year period when nongovernment salaries have barely kept up with inflation. A fairly crafted tax-cut plan would be affordable and is necessary.

The real flaw in the current plan is, as the Florida League of Cities points out, that tax savings are not guaranteed and that tax burdens will be unfairly shifted with unpredictable results.

Another problem is highlighted by TaxWatch, a reliable watchdog of the state's fiscal affairs: Heaping more savings on homesteaders will make them even less interested in local politics.

It is this inattention that allowed locally elected officials to soak the tax-paying minority while blaming the injustice on the state taxing system.

The system has already been improved a little. A cap on local budget increases is in effect - Hillsborough commissioners enacted their own. And a number of other good ideas are being debated, some offered by legislators themselves, others from folks from all walks of life.

The Tax and Budget Reform Commission is aware of them all and will make its recommendations later this year. The panel, appointed by the governor and legislative leaders, can put amendments directly on the November ballot.

Taxpayers are sure to be offered a better deal. The main requirement is that they wait for it.

An Unwholesome Proposition

Here's the ballot summary for the proposed constitutional amendment:

"This revision proposes changes to the State Constitution relating to property taxation. With respect to homestead property, this revision: (1) increases the homestead exemption except for school district taxes and (2) allows homestead property owners to transfer up to $500,000 of their Save-Our-Homes benefits to their next homestead. With respect to nonhomestead property, this revision (3) provides a $25,000 exemption for tangible personal property and (4) limits assessment increases for specified nonhomestead real property except for school district taxes."

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