We've been hearing a lot lately, and will hear a lot more, about Amendment 5 on the Nov. 4 ballot. It's a big change in the way Florida is taxed that will affect a lot of us, one way or the other.
You'll often hear the words "tax swap" used to describe Amendment 5. Here's how it works:
We'd get rid of a big chunk of property taxes on schools, a tax that is now required by the state. On average, this would cut everybody's property taxes by 25 percent.
Yaaay! A 25 percent property tax cut! Who could be against that?
Here's the thing. If we cut school property taxes by 25 percent, that is gonna whack something like $9-billion to $11-billion out of the education budget in this state.
Do we have a plan for how to make up that money for the schools? Yes, we do.
Here is the plan:
We'll figure that part out later.
Yep, that's the plan.
Amendment 5 says the Legislature can decide to make up the difference down the road by raising sales taxes, by closing tax loopholes, or by cutting spending.
This is a pig in a poke, and it is why a lot of folks are opposed to Amendment 5.
Business groups such as the Florida Chamber of Commerce are opposed, and for good reason. Who knows who will get whacked with taxes?
School groups are against it for a variety of reasons, not the least of which is that they are afraid of getting shorted by the Legislature.
The biggest group in favor of Amendment 5 is the Florida Association of Realtors, and that makes perfect sense too. A big cut in property taxes would probably help the housing market.
Now Gov. Charlie Crist is for it, too. He said so last week: "A 25 percent reduction in property taxes, wholesale, across the board … that's more than a tweak, I would think."
Amendment 5 says that part of the difference would be made up with a higher sales tax, an extra 1 cent on the dollar. The state sales tax is now 6 percent, although local governments can add more.
But even a 1-cent increase in the sales tax raises only $4-billion or so. The Legislature will still have to do what it hates to do the most — raise taxes on somebody else.
You certainly can make an argument for shifting the tax burden from property to other things. Sales taxes are based on consumption. Also, a lot of non-Floridians pay sales taxes in Florida, so we could stick them with part of the burden.
You also could argue, as a lot of critics do, that Florida's taxes have too many loopholes. Amendment 5 would force the Legislature to plug some of them.
But the defining characteristic of Amendment 5 is the "we'll figure it out later'' part. It's kind of like quitting your job without knowing exactly how you're going to pay the rent next month.
It seems like a nutty way to do business. But it was the only deal that the Florida Taxation and Budget Commission, which put Amendment 5 on the ballot, could agree to.
Let's see whether 60 percent of Floridians agree as well.
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Here's a program note:
I'm taking a little break from writing this column to work on a different assignment. It should last just a few weeks, and I'll see you on the other side.
In the meantime, look out for hurricanes and politicians.