Tax surgery needed, not Band-Aids

Editorial

The Legislature is giving voters another chance to cut selected property taxes in what has become a regular exercise that has nothing to do with either local revenue needs or fairness.

Longstanding tax breaks for Florida homeowners have over time shifted the property-tax load to business. Now the Legislature wants to change the result of its pro-homeowner policy and give business a bigger break. It also wants to give a jumbo tax shelter to homebuyers who haven't recently owned a home.

These cuts are defensible within the state's inequitable taxing system, but support for this sort of tinkering is a symptom of bigger problems. What Florida really needs is an entirely new and more understandable system that treats all property owners pretty much the same.

The main purpose of the latest constitutional change would be to cap the increase in the taxable value of a non-homestead property to 5 percent a year. Now the cap is 10 percent, while homesteads have long been capped at 3 percent. Another change would allow a property's taxes to stay the same in years the underlying value of the property did not increase, regardless of the gap between market value and taxable value.

In still another change, a homebuyer who hasn't had a homestead exemption for three years would be allowed to apply for a new exemption worth, in the first year, up to half a home's value. The break would be limited to 50 percent of the median value of homes in that county, would phase out by 20 percentage points a year and would not apply to taxes for schools.

The calculation is complex, so the amount a homebuyer might save over five years does not easily come to mind. It's also hard to see why existing homeowners, many of them struggling to avoid foreclosure, should have to subsidize the cost of local services of new buyers who might have far more income and could have gotten a far better deal on their house.

What's next, giving a special tax break to those who had a homestead but lost it during the foreclosure crisis? No amount of tinkering can smooth out the inequities built into the present system.

We agree with Rep. Jeff Clemens, who said of the new proposals: "What we're doing is putting Band-Aids on top of Band-Aids. We should all really stop for a second, look back and say maybe we need to look at our tax system as a whole from the ground up."

The Democrat from Lake Worth is exactly right but lost the argument. And while we're dreaming about an ideal system that is simple and fair, let's also remember why we allow governments to tax our property. In Florida, property taxes support local schools, cities, counties and agencies.

If you live in Tampa and think your property taxes are too high, consider that all the revenue the city gets from property taxes is not enough to cover the budget of just the police department. Property taxes would have to go up about 12 percent in Tampa to pay for police protection, yet property values and revenue continue to fall.

The fact is, some people are paying too much, and some are getting a free ride. The many layers of exemptions and protections have helped longtime homeowners avoid paying a fair share of the cost of local government. This group, often including a town's most influential citizens, made scarcely a peep during the housing boom when property values and revenue soared. They were protected by the Save Our Homes cap, and the newcomers who were paying much higher taxes on houses worth much less had little power.

Now, a value cap for commercial property would begin creating inequities among businesses. When property values start to rise, the advantage established businesses would have over new ones would grow each year and distort what is supposed to be the free market.

The recent decline in real estate prices offers a rare opportunity to begin untangling the rules to make property taxes a more straightforward reflection of value. If everyone had an equal stake, voters would be united in demanding a local tax rate that covers local needs and nothing more.

Don't expect many lawmakers to join the effort to peel off the layers of tax complexity. It's safer to keep giving away Band-Aids.