TALLAHASSEE — One of the easiest ways to show voters the impact of tax cuts is to break them down in a way people can appreciate.
Take Gov. Rick Scott's budget rollout last week. Scott said his spending plan includes $4.1 billion in tax and fee relief over two years. That sounds good, but it means little to someone unfamiliar with the inner workings of the state budget.
So in a graphic showing the proposed tax relief for 2011-13, Scott's budget gurus added this simple-to-digest sound bite: "Total Savings Per Household, $540 Over Two Years." The figure got repeated by various media outlets.
But is it right?
Scott's budget proposal includes a variety of tax and fee reductions. Among them:
• Reduce the corporate income tax from 5.5 percent to 3 percent in 2011-12 and from 3 percent to 2.5 percent in 2012-13. The rate cut will save those who pay the tax $459 million this year and a little more than $1 billion in 2012-13.
• Reduce the required local effort, a property tax for schools, saving taxpayers around $500 million in 2011-12. The tax cut would carry forward in 2012-13.
• Reduce the property tax collected by state water management districts 25 percent for two years, saving taxpayers $180 million annually.
• Reduce unemployment compensation taxes by shortening how long Floridians can collect benefits and making it more difficult for them to be eligible. Scott's office says that will save $630.8 million over two years.
• Roll back 2009 Legislature-approved fee increases for driver's licenses, vehicle registrations and other motor vehicle fees. Scott says the rollback would save drivers $492 million over two years.
• Repeal or alter other small taxes on ammonia, pesticides, fertilizer, solvents, dry cleaning, tires and lead acid batteries, among other things. The changes would save $77 million over two years, Scott's office says.
Taken together, Scott says the savings for taxpayers is $4.1 billion over two years.
But what's critical in determining a per-household savings is remembering just who will get the tax breaks. And, who won't.
Two of the three biggest tax cuts — the reduction of the corporate income tax and the changes to the unemployment compensation tax — apply only to corporations. So unless your household is like Rick Scott's and you own a corporation, you'll see no direct savings under Scott's plans. Supporters of the cuts argue that the benefits could trickle down to average Floridians through additional jobs or cheaper prices for goods and services.
But there's no guarantee either will happen.
The cuts to the corporate income tax and the unemployment compensation tax make up $2.1 billion of Scott's overall $4.1 billion impact.
In comments to the Senate Budget Committee, Scott budget chief Jerry McDaniel said Scott's top tax priority is to remove taxes that he says inhibit job creation. McDaniel said Scott particularly wanted to reduce and eventually eliminate the state's corporate income tax.
We asked McDaniel if he knew whether the per-household figure accounted for the corporate tax cuts. McDaniel said he didn't know and suggested we e-mail the governor's press office seeking clarification. We did, but did not hear back.
So we did the math ourselves.
According to the U.S. Census, Florida had 6,337,929 households in 2000 (the last year that precise data is available). However, the state's Demographic Estimating Conference meets annually to project the number of Florida households, among other things. At its most recent meeting on Oct. 25, 2010, the group estimated that as of Jan. 1, Florida would have roughly 7.5 million households. The group's estimates are based on the active number of residential electric customers and residential building permits.
Using the most recent household estimate, it's easy to see the error in Scott's tax cut math.
Not counting the cuts to the corporate income tax and the unemployment compensation tax, the average household would see in the neighborhood of $267 in tax savings over two years, not $540. ($2 billion/7.5 million=$267 per household). That's an annual savings of around $134, or less than half of what Scott suggested.
The $540-per-household figure Scott used to sell his budget plan is intended to appeal to voters who would relish a hefty tax cut, even over two years. But he failed to factor in that more than half of those tax cuts would apply only to employers, not regular Floridians. In calculating the savings, it appears clear that Scott and his office simply divided the entire tax cut as projected by Scott — $4.1 billion — by the entire number of Florida households — 7.5 million — to reach their average savings of $540. That's easy math. But it's deceptive.
We rate this claim Barely True.