As politics is the grandest of theaters, effective politicians need to be good actors. If they were eligible for Oscars, Gov. Jeb Bush's budget show the other day would make him a favorite in the category of best performance in an unsupportable role.
The script called for yet another intangibles tax cut for Florida's wealthiest people, and he made it through that part without cracking a smile even over the shopworn slogan, "seniors and savers."
Little people no longer pay that tax, and those whose modest wealth was entirely in retirement accounts never did. Owing to previous acts of Bush and the Legislature, only an estimated 233,000 businesses and prosperous individuals would benefit from the $91-million he proposes to give back next year. He acknowledged as much in saying that the next step should be to cut the rate rather than raise the exemption. Some 600,000 were exempted just this year.
The tax, which affects primarily stocks, bonds, loans, notes and accounts receivable, comes with a very high threshold. Individuals and businesses pay it only on taxable assets exceeding $250,000. For couples, the exemption is $500,000. For those who do pay, the rate is a modest $1 for each $1,000, a fraction of what would be owed on an equivalent investment in real estate. So for a couple with $1-million in gold-plated stocks, the tax would be just $500. Does Bush seriously think that's too great a burden for them to bear?
The issue is not so much the money at stake, though Florida does have better uses for it, as the sheer immorality of cutting that tax without even a nod to any compensating tax reform. The intangibles tax is far from perfect, but it's the only tax the state collects that's based on people's ability to pay it.
With personal income exempt, Florida's tax structure is notoriously regressive. According to the Institute on Taxation and Economic Policy, this state's poorest people are taxed _ primarily through sales _ nearly five times harder than the richest. A typical middle-class working family pays from 8 to 10 percent of its income in state and local taxes, compared with only 3 percent paid by the wealthiest. The governor's proposed nine-day sales tax holiday is great theater, but it does nothing about the fundamental injustice.
On the other hand, the governor wants to raise college and university tuition yet again and cut Medicaid payments to nursing homes and hospitals. His proposed Healthy Kids spending increase is praiseworthy only so far as it goes, which isn't nearly far enough; nearly 90,000 children would remain on a waiting list. Once again, he wants county taxpayers to assume the state's responsibility for juvenile detention centers. Once again, he wants to raid trust funds that were explicitly raised for other purposes.
The colossal incongruity was so obvious that Bush felt he had to try to rationalize it. Many wealthy people, he said, manage to evade the intangibles tax by temporarily parking their wealth out of state. And those who don't, he argued, are taxed unfairly on income that has already been taxed. That was sophistry; it insulted the public's intelligence
The appropriate remedy for tax evasion is to put a stop to it. One way would be to levy the tax on average annual holdings, rather than the value on January 1. As for taxing wealth that was already taxed when earned, all of Florida's taxes are susceptible to the same objection. The equity in your home represents after-tax income, yet Florida taxes it. Your paycheck is after-tax income, but that doesn't spare you from paying sales tax on the part you spend at the store.
Bush's tax cut may play well in the House of Representatives, but leading senators have already given it deservedly unfavorable reviews. However the total budget script is eventually rewritten, that part belongs on the cutting room floor.