Wednesday, May 23, 2018
Politics

PolitiFact Florida: Nan Rich makes claims about state's economy, taxes

Nan Rich has been portraying herself as the real Democrat in the race as she challenges former Gov. Charlie Crist for the party's nomination to run against Gov. Rick Scott in November.

To that end, she talked about tax policy and Florida's economy at a recent speech before the Florida Press Association.

In response to questions, Rich said Florida's tax structure was too regressive.

"I think it's a regressive tax base, and when you look at some of the studies saying it's the third-most regressive tax base — I don't want you to quote me on that because PolitiFact may get me, I'm not sure if it's (No.) 3 — but I think there are things we need to do to make a more equitable and fair tax structure."

She also told the crowd of journalists that "tourism and retirees are the dominant economic engines in our state."

PolitiFact Florida decided to fact-check both statements.

Regressive taxes

Rich cited a 2013 report by the Institute on Taxation and Economic Policy, which partners with Citizens for Tax Justice, a group that advocates for middle- and low-income families.

The report concluded that all states have regressive tax systems. It means that state taxes come more from the poor and middle class than from the rich.

The report measures property, sales and excise taxes paid by different income groups in each state in 2013 and concludes Florida is "No. 2 of the terrible 10" — the second-most regressive tax system in the country. (No. 1 was Washington state.)

"The No. 1 and No. 2 predictor of a very unfair tax system is not having a personal income tax of any kind and an above-average sales tax, and Florida has both of those things," said Matt Gardner, the institute's executive director.

The report found that for non-elderly taxpayers, the lowest 20 percent pay 13.2 percent of their income toward state and local taxes. Meanwhile, the top 1 percent of earners only pay about 2.3 percent of their income toward state and local taxes.

We rate Rich's statement Mostly True.

Tourism and retirees

We found no cut-and-dried answers to the question of which sectors are Florida's dominant economic engines. However, we did find evidence that shows tourism and retirees play an important role in the state's economy.

Rich relied on a 2014 report by the LeRoy Collins Institute, a public-policy group at Florida State University, titled "Tougher Choices: Shaping Florida's Future." It was written by professors Jim Dewey and David Denslow with the Bureau of Economic and Business Research at the University of Florida.

The report examines state spending, demographics and jobs. Among the conclusions is that "Florida's reliance on retirees and tourists comes at a price as the demands of older residents and tourists are disproportionately linked to lower-paid service jobs. … Compared to the rest of the nation, Florida has relatively fewer high-skill high-wage jobs and relatively more low-skill low-wage jobs, many serving tourists and retirees."

We turned to the U.S. Bureau of Economic Analysis to look at real gross domestic product by industry in the state of Florida. Unfortunately, the data does not include "tourism" or "retirees" as an industry. The state's biggest generator of GDP is "finance, insurance, real estate, rental and leasing," at $161.8 billion. That does include some sectors relevant to Rich's claim, such as real estate purchased by retirees.

A Visit Florida spokeswoman told PolitiFact Florida that tourism is "the state's No. 1 industry" and generates 23 percent of the state's sales tax revenue and employs about 1.1 million Floridians.

However, when we asked what economic measures prove that tourism is the top industry, Visit Florida spokeswoman Kathy Torian said: "It's an aspirational statement rather than a scientific fact. . . . We feel that the combination of sales tax revenue, employment and economic impact from visitor spending make the case for the tourism industry."

We also interviewed four economists who generally agreed that tourism and retirees play a vital role in Florida's economy, though with some quibbles.

Bill Seyfried, an economist at Rollins College, said he'd prefer the term "important engines" rather than "dominant."

"Clearly, both tourism and retirees have strong impacts on the Florida economy — more than most other states — but the state economy is becoming more diversified as evidence by deeper integration with the global economy, which is likely to get a further boost with the expansion of the Panama Canal, as well as increased growth in professional/technical services, growing aerospace and life-science sectors," he said.

We rate this statement Mostly True.

Edited for print. To read more, go to PolitiFact.com/florida.

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