Saturday, June 23, 2018
Editorials

Reject special tax breaks on real estate

No one likes to pay taxes. But a complicated constitutional amendment written by state legislators would make an unfair property tax system worse by handing out more special tax breaks aimed at specific groups of property owners. Voters should just say no and reject Amendment 4.

The Florida Realtors, one of Tallahassee's most powerful trade groups, persuaded Republican lawmakers to embrace a trio of tax breaks. In just four years, Amendment 4 would reduce local governments' tax collections by an estimated $1.6 billion. It would restructure the state's property tax system to prevent the ability of counties, cities and special taxing districts to recover ground lost in the recession.

Beyond that bad policy, however, legislative leaders embraced arbitrary tax breaks for some that will shift the burden for paying for government to everyone else. The provisions would:

Grant new home buyers an extraordinary tax break for five years, ensuring that their neighbors who bought during the recent housing boom will pay higher taxes even as they may also be underwater on their mortgages. In the first year of ownership, new buyers would pay taxes on the equivalent of 50 percent of the home's taxable value. They would gradually pay more each year until they are at 100 percent in the sixth year. Not only is that unfair to current homeowners who pay taxes based on a taxable value close to the market value, it encourages people to buy homes they might not be able to afford.

Further protect snowbirds and other nonresidential property owners from tax increases, ultimately discouraging new business investment. Amendment 4 would cap the annual increase in taxable value for nonhomesteaded property at 5 percent instead of the current 10 percent. Supporters argue that provides certainty for businesses and investors, but it will also make new businesses less competitive. Consider, for example, two fast-food restaurants at the same intersection. Depending on when owners bought the properties, they could pay radically different tax bills, burdening one with higher operating costs.

• Ensure Florida's property tax system never gets fairer. The Legislature would be allowed to suspend the so-called "recapture rule," the one mechanism the state has for restoring some equity to the system. Under the recapture rule, property owners paying taxes based on below-market value due to Save Our Homes limits and the similar cap on non-homesteaded properties can see their taxable values increase even in a down market. But the increase is never more than 3 percent for homeowners and 10 percent for nonhomestead properties — and those owners have paid less taxes for years than neighbors who bought more recently.

The Realtors want voters to believe that Amendment 4 can solve the problems afflicting the real estate market such as subprime lending, overbuilding and the financial crisis. It won't. Tax collections have dropped precipitously in recent years, and caps on annual assessment increases mean they won't rebound quickly, even with the recapture rule. These targeted tax breaks only make the system more unfair, when what is really needed is comprehensive reform.

Voters should just say no to the Legislature's constitutional amendments. On Amendment 4, the Tampa Bay Times recommends voting no.

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