Florida Republicans favor elimination of property tax in favor of 3 cent increase in sales tax

[Herman Munster]

http://www.orlandosentinel.com/news/local/state/orl-taxes2007feb20,0,1922504.story?coll=orl-news-headlines-state

TALLAHASSEE -- Republican leaders in the Florida House are floating a radical tax overhaul that would eliminate property taxes paid by homeowners in favor of a 3-cent increase to the state sales tax. The tax-swap would be paired with stiff spending or revenue caps on cities and counties intended to limit the amount of property taxes they could collect from all other property owners, including owners of businesses, rental property and second homes.

"It's been kicked around," said Senate Majority Leader Daniel Webster, R-Winter Garden, who was briefed of the concept Monday. "The idea is very interesting to me." House Republicans, who on Monday began a two-day property-tax conference, say they are still considering an array of possible property-tax changes. But they also say momentum is building for a plan that involves trading lower property taxes for higher sales taxes.

House Speaker Marco Rubio has assigned Donna Arduin, the former budget director under former Gov. Jeb Bush whom Rubio put on a $10,000-a-month consulting contract, to analyze the concept. Measures that have been considered range from replacing school property taxes with a several-cent sales-tax hike to scrapping all property levies and more than doubling the state's 6 percent sales-tax rate, to 13.5 percent. Rep. Dennis Baxley, R-Ocala, said many lawmakers have warmed in particular to the idea of getting rid of property taxes for so-called "homestead properties," which are houses and condominiums that are their owners' primary residences.

"I definitely think it's on the table," Baxley said.

[ForFuxakes]

1. As a new Florida resident..

I can say that I am not yet opposed to this idea...let's see what happens

[karlrschneider]

38. As a former FL resident (for 17 years), I say it sucks. Big time.

Enjoy your sales tax-free groceries while you can.

[SharonAnn]

50. Great, tax the poor for what they need to live. Exempt the rich.

That way, the poor can pay ALL the taxes!

The wealthy don't want to pay any taxes and they shouldn't have to, since they've bought the government.

[lukasahero]

55. Ding ding ding we have a winner!

Thank you - I was hoping that would be noted early in this thread.

[The Backlash Cometh]

2. Explain something to me.

If someone owns three houses, he has to pay property tax on at least two, Homestead exempting atleast one, correct? So, if a Republican is in the real estate business (the scam industry of choice) and has invested in five or six homes, this is a big savings for him if he doesn't have to pay taxes on five of them, correct?

[ComerPerro]

3. That's a big part of it. Plus, sales tax is more regressive than property tax

[ForFuxakes]

5. Self delete

[ForFuxakes]

Yes I suppose that is true...

But the fact of the matter is, is that the average person (I am sure that you also fall into this category) owns only one home, and an oppressive property tax can be unbearable. In some places in Florida(and I dare say many locations around the US), the mortgage industry has looked the other way as appraisers have over-valued houses so people can make profits, thereby driving up property taxes accross the board.

[ForFuxakes]

6. self-delete

[Herman Munster]

7. no

you are only allowed to claim homestead on 1 house. Your primary residence.

So 1 house would be tax free. Every other property you own you will have to pay taxes on. That includes vacation homes and rental property.

[The Backlash Cometh]

9. Yes, that's what I said.

Homestead Exemption applies to your primary residence. All other homes would have property taxes. '

I'm willing to bet that the real estate industry is behind this.

[Tess49]

33. Interesting. In Oklahoma, you have to pay property tax on your

primary residence even if you claim homestead exemption. You pay at a reduced rate, however.

[dysfunctional press]

49. tax-free??? i don't think so...

most people who own homes own only one- what would be the point of having a property tax that most people wouldn't pay anyway.

here in illinois, the homestead exemption only reduces your property taxes- and not by all that much, either.

[tkmorris]

22. The exemption does not eliminate the tax

It only reduces it. For any home you claim the exemption on, and yes that can only be the primary residence, you deduct $25,000 from the homes value for tax purposes. We have the exemption on our home here and still pay in excess of $1000 per year in taxes.

[Herman Munster]

23. the exemption amount is almost trivial now

$25,000 isn't much when the median home is around $400k.

The big benefit for having homestead is your appraised value is limited to inflation or 3% increase per year, whichever is lower.

This is why you can have two people in a cookie cutter subdivision with the exact same home right next to each other but the guy who lived in the home since 1985 pays $1000 on his property taxes while the guy who bought the home next door in 2005 pays $8000.

It's totally unfair.

[tkmorris]

27. Perhaps, but

Is it any fairer for someone to have purchased a home in say 1990 to have their tax burden dramatically increased year after year because some yahoos drive the home prices up 5 fold? Yes, their home increases in value as well but that increase isn't realized until the home is sold. A lot of homeowners would have lost their home in the last decade without that 3% proviso.

[Herman Munster]

28. the sales tax proposal solves that

nobody would pay any tax. Old homeowners and new homeowners benefit. Rich people who own more than 1 home would still have to pay tax.

They have to mitigate the impact on poor people somehow. Maybe having a lot more tax free holidays for clothing and school supplies and what not for poor people or outright exempting a lot of these items from tax.

[tkmorris]

35. Yes it does, wasn't arguing otherwise

However I am still working through the ramifications of this plan. It is more complex than it seems at first glance. To be honest I cannot believe that a 3% increase in the sales tax would cover the revenue losses. Further, the plan seems to take a great deal of power away from local governments and gives it to Tallahassee, which I have a problem with.

I'm still mulling it over.

[The Backlash Cometh]

30. The primary residence should be protected, but I have a big problem

with people or corporations who own several for the purpose of resell, because THEY are the ones who are driving up the prices and helping Florida keep its transient nature. As long as people know they aren't going to stay in a house for longer than six years, no need to confront the scoundrels that make Florida a place for dishonest people to prey on the unsuspecting.

[tkmorris]

36. I agree

A corporation owns the lot next to ours, and not only can I not afford to purchase it (I checked. The lot alone is priced at almost what I paid for my house) but it is completely going to seed to boot. The overgrowth from it is destroying our fence and our side porch. Speculators piss me off sometimes.

[soup]

24. Homestead exemptions are for primary residence only,

as far as I know.

We've been here since 1985, our crummy little tumble-down shack cute cozy cottage with water view is homesteaded - no tax on the first $25,000. Pay, oh, round about 700? 800? a year in property taxes, and they can only be raised some small percentage per year.

Since property values have risen so much...
Our neighbor bought her house about 5-6 yrs. ago. She pays about double what we do.
Our son bought a house last year in the same ridiculously bloated market comfortably established neighborhood. He pays easily triple.
Same neighborhood. Basically the same lovely homes, same size lots, etc.

Can't imagine what someone in a big mcmansion in a fancy over-priced neighborhood is paying. But, this would definitely affect them.

Property taxes are not a huge consideration for us. Insurance, on the other hand, may just price us out of here, or into figuring a way to finish paying this humble hovel darling family home off quickly and going without insurance altogether - scary thought since we're in a flood zone.

Not sure if this proposal would personally hurt us badly. Haven't thought it all through. Guess it has the potential to if everything we buy has an added tax percentage.

[JCMach1]

45. The brilliant commissioners in my old homeplace are pushing for homestead to begin on the 2nd 25,000

Since the those who are in poverty-level homes are just not paying there share.

Did I mention they are DEMOCRATS!


:grr:

Of course that is bloody farkin' typical of my old homestate.

[JCMach1]

44. Bingo.... Sales Tax hurts the poor far more.... especially in an environment

where housing values are inflated and high. Oh yeah, and powerful people have invested too much money in them...

[NashVegas]

4. This Would Screw Over Lesser Income People

Of course, I'm sure all the landlords will turn around and pass the savings onto their tenants.

[Herman Munster]

10. it's not that simple

A lot of lower income people can't afford a home because of taxes. This would open up homeownership to many new folks. It also eliminates the problem with long time residents afraid to move as their life chances. Cause if you move right now you lose save our homes protection and your taxes go to market rate on the new property. This can mean seeing your tax bill go from $1500 to $8000 if you move, especially in South Florida.

Also, food and medicine and other basic necessities are already tax-exempt in Florida.

[salin]

46. property taxes are not want prevent minimum wage earners

or those earning just a bit more than minimum wage from buying homes. Down payments are the first of many hurdles.

But these are the very folks whose inoomes would be most severely hit by doubling the sales tax to 13.5%. Unless one assumes that the poor only purchase food and medicine...

I left a very expensive housing market for the choice to be closer to family, and to be able to someday (which is now a few years ago) be able to buy a home. Not everyone has the option of mobility - but for those that do, there are areas where the values of home are more reasonable, and thus the taxes reflect that.

I work with so many families that earn so very little, that it is frustrating when folks completely ignore what the real cost for thsoe living on the working-poor level. This would push many folks from the near poverty level, to under the poverty level.

For those of us who earn more than 5 or 7 dollars an hour to underestimate the direct impact upon those living on such meager wages of such a high sales tax, suggests that our own egocentrism has trumped compassion/empathy. I don't *love* paying my property taxes - but I bought within my affordability range and it is a price that I pay for being a home owner instead of a renter. But while the increase in sales tax would take a bite out of my budget, at this point in life (not true in earlier parts of my professional life) I can absorb it. But I work with many folks who could not.

I worked with folks who when gas prices rose to $3 a gallon started making serious choices not only about short drives to the store (not a bad thing, restricting driving), but tradeoffs in cutting other necessary expenditures in order to pay to get to and from work.

Just my two cents.

[The Backlash Cometh]

52. Then eliminate the taxes on the primary home.

[piedmont]

8. Sounds ok to me...

Property taxes help fuel sprawl by making it more economically difficult to keep land in a less-developed condition once nearby areas are developed. So, a forested piece of property that grandpa left you may cost $200 in taxes this year, but $2000 next year after the real estate developers convince the county to put a (needless) road through and your property is now valued at $100,000 an acre. The way we tax land must be fixed if we want to stop sprawl.

[FormerDittoHead]

11. I don't have time to get into this, but I'm against this...

We can tax 1) income 2) spending 3) wealth/ownership/property

The ONLY way a plan like this COULD work is if they raise the sales tax enough to equal the income from the property taxes, OK?

That means (I'll go slowly) that without radically reducing roads, schools, etc., the same amount of taxes must still be paid by basically the same people.

The QUESTION is WHO will the change in tax structure benefit (pay less), and WHO will pay MORE?

Currently:

The poorest, those with the least amount of property:
1) spend all of their money/can't save (ie: all of their income is subject to sales tax)
2) live in property not worth much, therefore paying the lowest amount of property taxes...

The richest, those with the most property:
1) have money left over; all of their income isn't taxed under the new
2) pay the most for property taxes.

PLEASE EXPLAIN HOW RAISING TAXES ON THE POOREST OF PEOPLE IS A "FAIR" THING...

[ForFuxakes]

13. Well...

Given that tourism is the biggest industry in FL, I guess the snowbirds and Disney vacationers will have to pitch in...OBTW the spring breakers too with their daddy's credit card...

[FormerDittoHead]

14. Fair enough re: tourism. Still the poor will pay more tax. n/t

[rsr1771]

12. As a Floridian...

this idea has lots of appeal. Homeowners in this state--I am one-- pay property taxes on ALL homes- even with the "homestead exemption." All the exemption does is reduce the amount that home is assessed at. Even with the exemption, I paid 1,500 in property taxes last year on a home worth about 210 thousand.

People in this state are having a hard time buying and keeping a house with property taxes and insurance rates going up every year. I'd much rather go with a modest sales tax increase.

[mtnester]

31. You can move to Ohio and pay the following:

Property taxes - for us that amounts to a a little over $3000.00 annually, in town, on less than an acre

Ohio Income Tax - at least this comes out AFTER any pension contribution reduction

Ohio sales tax - and depending on what county you make your purchase in, it could be anywhere from 6.25% to 7% if your county has some additional sales tax for specific county purpose

School district income tax - for us it is 1.75%, and comes out BEFORE any pension contribution reduction

City/village income tax - for us it is 1.25%, and comes out BEFORE any pension contribution reduction

If you work in a neighboring city/village, you can also pay their 1% - 2% income tax (i.e. if you work inside Columbus city limits and live in one of the burbs). This ALSO comes out BEFORE any pension contribution reduction...for the bulk of folks around here, it is 2% (City of Columbus income tax).

So, for us, $3000.00 annually in property tax, 6.25 - 7% sales tax, and for me personally, a total of 4.75% income tax (combination school district and city income where I work AND live).

I will only MENTION the self employment taxes we pay for our small business (hubby and partner) and the downright EXTORTION of the Ohio Bureau of Worker's Compensation (11 cents for every dollar we pay in gross payroll...11 CENTS ON THE DOLLAR TO OBWC....extortion)


bleh - rant over

[soup]

41. But, consider also, basics like utilities -

electricity and water - Add another 3 cents on the dollar.

Then there's construction - Not sure how much a single 2x4 is right now, but 3 cents more on every dollar spent...

Just thinking out loud here, trying to sort it out.

[moc]

54. I pay 3-4x that on a house valued similarly in Texas. nt

[FormerDittoHead]

58. Let me see: in NJ - $4k/yr on a $100k house, AND WE HAVE AN INCOME TAX TOO. Boo, hoo for you! n/t

[Herman Munster]

15. the nice thing about sales tax

is you can CHOOSE how much to pay. You aren't sucker punched by the whims of the market or your corrupt local officials.

Basic necessities are tax-free in Florida and will remain so. That includes food and medicine.

Georgia has a 4% sales tax. People within 100 miles of the Georgia border who are economically challenged will probably cross state lines for big purchases to save money.

Also, there is a vast unregulated internet world out there where people pay 0% sales tax.

[depakid]

25. The nasty thing about sales tax is that it's regressive

-the burden of the tax falls on those with the least ability to pay.

And before anyone jumps in and says "but it's a flat rate, everyone pays the same" let me introduce the concept of declining marginal utility:

"The Declining Marginal Utility of Money" is another high-fallutin' term for a phenomenon recognizable to all. The value to an individual of a constant sum of money (say $1,000) gained or lost is inversely proportional to that individual's wealth. Still too academic for you? It comes to this: because that one grand is about a month's salary to a single mother working at Wal-Mart at minimum wage, a loss to her of that thousand is a disaster. In contrast, when Microsoft zillionaires Bill Gates, Paul Allen and their wives enjoy a night on the town, it is a matter of complete indifference to either who picks up the thousand dollar tab.

In a single day on Wall Street, Bill Gates can lose (and presumably has lost) a billion dollars of his gross wealth. Such a loss would no doubt perturb Gates somewhat less than would the above-noted hypothetical loss of one thousand dollars to the Wal-Mart mom. This means that the marginal value of a thousand dollars to Gates is considerably less than a millionth of the marginal value of the same amount to an individual working at minimum wage. Ninety-nine plus percent of us are found within those extremes, though the marginal value of cash to the vast majority of us is much closer to that of the Wal-Mart mom.

You know this, I know this -- and so too does Steve Forbes. Yet he mounted a credible Presidential campaign on essentially a single issue: "The flat tax." "Its only fair," he tells us, "that we all pay the same rate of income tax." The same rate, mind you, not the same amount. Even Forbes acknowledges that a dollar to him is not worth as much as it is to the rest of us. But neither is the same percentage: a tax liability of ten percent of Forbes' eight-figure income is far less painful to him than the same ten percent of the five figure income is to the rest of us."

Flunking Econ 101
May 31, 2002
By Ernest Partridge

http://www.democraticunderground.com/articles/02/05/31_econ.html

[Herman Munster]

26. maybe so

but as I said there are a lot of mitigating factors that poor people can do to eliminate paying a huge chunk of the sales tax.

They can shop in Georgia or on the internet tax free. On the other hand, if you don't pay what the tax man says you owe on your property, even if you owe it free and clear, you can lose your home.

[piedmont]

29. And worst of all, you have no control over how much you'll pay

Development outside your property boundary that you have ZERO foreknowledge of or control over can make your appraised value go up and your tax bill with it. Is that fair? Is that what we want shaping how cities and towns grow?

[depakid]

40. Somehow I doubt poor people in South Florida are going to

drive to Georgia or shop on the internet.

Nope, they'll just have their pockets picked, while the owners of all those fancy houses and yachts on the intercoastal laugh all the way to the bank.

You all have much to learn about responsible public policy in Florida.

[Kickin_Donkey]

43. Bingo ...

Declining Marginal Utility is why this idea is bad. Economics 1. Sales tax is regressive.

That's why the U.S. used to have a steep progressive rate income tax -- remember the 90% bracket? Now, IIRC, it's down to something like 60%.

[YankmeCrankme]

42. That's the bad thing about it

If people are more selective about where they buy taxable sales items the state collects less money for the things that the property tax funded. Like new development, sewers, schools, fire dept. etc. This is an added burden on the non-property owners, especially lower income ones. Like someone said, rentals are certainly not going to pass this along to the tenants and even if they did I'm not sure if the savings divided over the number of tenants would make it worth it.

[originalpckelly]

16. I think they should eliminate property and sales taxes, but should have an income tax...

back property tax can result in people loosing their houses, even if they own them outright. Property taxes keep people from really owning anything, and sales taxes unfairly target the poor who spend more of their income on buying things, unlike the rich.

I think that there should always be a single unified income tax on all types of income.

[Herman Munster]

17. never going to happen in a state like florida

millions of retirees moved here because florida has no state income tax and they are living on fixed incomes.

Also, it's in Florida's consitituion. It would need 60% in a referendum to gain passage. Never in a million years will 60% of people vote themselves an income tax. Never. Going. To. Happen.

[originalpckelly]

34. Actually, I believe in a truncated income tax, one that would exempt certain categories...

and amounts of income from being taxed. Seniors and the poor would be included in that.

[FormerDittoHead]

20. Don't you people know that the rich own MUCH, MUCH, *MUCH* MORE property than YOU do????

I'm really sorry you have to pay any tax. Boo hoo.

My house is worth $100,000, and I pay FOUR THOUSAND DOLLARS in property taxes in NJ.

You're all whining around like YOUR house is worth the same as that Enron guy's, Ken Lay's house is worth (LIKE 30 FUCKING MILLION).

The rich already get around sales taxes (by not spending as much of their income as most others have to) and income taxes (by shifting wage income to wealth income, which isn't subject to wage taxes)

A reduction in property taxes will mean the rich pay MUCH less taxes than they do now.

[originalpckelly]

32. Do you own your home outright?

Secondly, I favor universal income taxation, but to protect seniors from harsh taxes I believe there should be a $50,000 cut off for a senior couple, or $25,000 cut off for a single senior. (And for normal payroll income, I believe there should be a baseline tax cut off for poor people at the poverty line for all the different family/non-family types.) This universal taxation of income will account for the property taxes. This would account for increases in property value and any income from the sale of a house that has appreciated during the time it was owned.

Now back to the property taxes, these taxes often result in people who've worked their entire lives for their homes to lose that home, should they be incapable of paying their property taxes in retirement. They really create a situation where no one can ever really own their home. Secondly, the increase in value of a house, is not a liquid increase and can only be realized when a home is sold. Yet, property taxes must be paid yearly, even if the home owner doesn't have gain actual income from the increased value of the house in that particular year.

I know from personal experience that rental property, foreclosures (this is my area of personal experience) and unpaid property taxes are excuses for rich people to abuse and profit from the hard work of the poor/middle class.

Usually with foreclosure or houses being seized for unpaid property taxes, there is an auction of the house for the unpaid mortgage or property taxes. At the auctions, the usual procedure is for the purchaser to pay FULL CASH for the property. Practically, the only people who can afford to pay cash for a house are the rich. Rich people get to buy these houses for less than what they would have sold for, had the homeowner simply sold the house themselves.

By law, it is my recollection that the mortgage company/place owed property taxes must pay any money above what the homeowner owed if the house sells for more than what was owed.

By far, however, houses usually do not sell for very much higher. The net effect is that poor and middle class homeowners who default on their mortgages or cannot pay their property taxes have their equity stolen from them by the rich because of those of auctions.

That's why I oppose property taxes.

[FormerDittoHead]

51. I didn't know Florida didn't have an INCOME tax...

Sorry, that DOES change things... You should mention that next time this comes up.

I still disagree, however, about your characterizations, but I respect that you're not a "zero-tax" advocate...

[flyingfysh]

18. this is a heavily regressive idea

It takes the tax burden away from rich people with fancy houses, and puts it on ordinary and poor people who have to buy things to live. So of course the Republicans like it.

[originalpckelly]

39. Well, you're partly right. The truth is that both property taxes and sales taxes...

are bad for middle class/poor people.

[Geek_Girl]

19. I know property taxes are incredibly high in Florida

But this will really screw the poor in that state. When I was growing up in Florida my mother and I lived below the poverty line and could barely afford the basics rent, food, clothing ect.. If we had to endure a higher sales tax I don't think we could've survived.

The state needs to find a way of bringing property taxes down with out increasing sales taxes.

[trumad]

37. Actually--compared to other states, Florida is not that bad.

Ya ever been to Houston? WOw!

[AikidoSoul]

48. Wrong-- it depends on WHERE you live in Florida. In the rich areas of the state and that includes

the coast -- taxes are very high.

But the Repugniks know a good ripoff when they see one, and so watch out folks.

For apartment dwellers that don't own homes, for every $15,000 you spend in Florida in goods,
you will subsidize those fancy houses to the tune of $2,025.00.

Ain't that lovely folks?

[iamjoy]

21. 9.1.1 - Please Hold. All Operators Are Busy

your approximate wait from this time is 10 minutes.

What in the heck do they mean that counties and cities need to limit spending - just what would they have them give up?

Doubtful it would be those subsidies to billionaire sports team owners to build an arena.

Our schools are underfunded, our roads are underfunded. The arts - ha!

[AikidoSoul]

47. Bad fucking idea. Regressive, Republican and Disgusting -- put burden on backs of poor

Many people don't own homes because they can't afford them.

Others moved to areas of FL where taxes are much lower.

So those with no homes (the poor) and those who moved to low tax areas, will pay the taxes for the rich who live on the coasts and in the cities?

No. This is a very bad, very regressive, very Republican idea.

[JoseNarof]

53. If they exempt food, utilities, rents

and other such necessitites from the sales tax I might go for it.

[RC Quake]

56. Well that's a lose/lose situation for some.

My mother-in-law has 4 homes that she rents as her livelihood. She is 75 years old, has macular degeneration and being a landlady is certainly taking its toll. In the last 4 years, she has lost over $45,000 in rent from people that move in, trash the place, stop paying rent and then finally leave after the court orders them to. She then spends the next 4 months cleaning the place, replacing the carpeting, filling holes in walls and outright refurbishing every single time someone leaves. She complains about having to pay property taxes on all the homes because she barely makes enough profit to pay her medical bills. Yes, we supplement her income monthly to keep her from being completely destitute, but eliminating property taxes would really help her situation. We want her to just sell everything off, but she refuses. This would at least help. I'm all for it.

[Norquist Nemesis]

57. It's not just bad for the residents. Tourism is Florida's #1 industry

A 12% sales tax is quite a chunk of change on a hotel bill in addition to any hotel/motel taxes that may be applied. :wow:

http://smallbusiness.yahoo.com/r-article-a-102814-m-61-sc-100-florida_tourism_up_in_2006-i
"...About 84.6 million people visited Florida in 2006, up 1.2 percent from the prior year, according to preliminary data from Visit Florida.

The numbers as a whole were up in 2006, but statistics show tourism declined sharply during the third quarter.

"Though we are encouraged by the recent release in visitation, the tourism market in Florida is currently quite unstable," said Donna Ross, chairwoman of the Visit Florida board of directors and CEO of the Florida Attractions Association.

Tourism is considered Florida's No. 1 industry, generating revenue that funds roads, schools and other statewide programs."