In election season, tax break promises are as predictable as campaign signs. But the details of Gov. Rick Scott's $1 billion tax cut proposal are more piecemeal than most, and the measures could contribute to inequities in Florida property taxes and further tie the hands of local governments that most closely serve residents. Voters should not be fooled by vague promises of unrealistic tax cuts that would do more harm than good.
Scott promised a potpourri of tax breaks on the campaign trail: a $120 million cut in the communication services tax; a $120 break on the $225 initial registration fee for cars; $200 million in sales tax holidays, which require families to spend money to save money; and a trio of breaks for Florida businesses — elimination of the manufacturing sales tax and the phase-out of both the business income tax and the sales tax on commercial leases.
But most troubling is Scott's plan to ask the Legislature to seek voter approval to eliminate one of the tools local governments were able to rely upon to make it through the economic recession. Scott is calling for the elimination of the state's "recapture rule." That ensures that property owners who enjoy extraordinary breaks under the state's homestead or commercial property assessment caps don't forever have significantly lower property tax bills than neighbors who bought more recently. It's the one mechanism that makes a system that treats property owners differently based on when they buy a bit fairer.
In the recent recession, the recapture rule also played a role in preventing property tax rolls — the primary means for paying for local government and public schools — from collapsing further and forcing deeper local government and school spending cuts.
Florida voters already had a chance to weigh in on this idea, back in 2012, as part of a slew of property tax changes put on the ballot at the behest of the state's real estate industry to promote new home buying. But the broad scheme failed to muster the 60 percent voter approval required to amend the state Constitution.
Scott's campaign didn't assign a value to his plan to eliminate the recapture rule — which would also require the approval of 60 percent of voters. And the irony is Floridians likely wouldn't see any benefit at all as long as real estate values continue to grow.
The only time the recapture rule kicks in is during down economic cycles. Even then, it only impacts property owners who have received a tax break in previous years because their assessed value has been suppressed by the state's Save Our Homes cap or a similar cap for nonhomesteaded properties. Under the recapture rule, when property values are declining, county property appraisers still must reset higher the capped values of those whose assessed values remain below market value. However, those increases can be no more than 3 percent for homestead properties (or 10 percent for commercial properties) or the cost of living increase, whichever is lower.
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The absurdity of the "problem" Scott is trying to fix? One year during the most recent recession, 2009, the cost-of-living adjustment to assessed values was just one-tenth of 1 percent. And still, those property owners were likely paying significantly less in taxes than neighbors who bought a similar property at the height of the market.
The basic tenet of tax policy should be fairness: Like-situated residents should share a similar tax burden. Scott would rather increase property tax inequities than fix them.