A House committee is looking at ways to replace property taxes with a higher state sales tax. The House Finance & Tax Committee on Wednesday started to explore different scenarios that would shift the tax burden to shoppers by eliminating or reducing the number of Floridians paying property taxes.
Committee Chairman Matt Gaetz, R-Fort Walton Beach, said any scenarios will need “many hours to fine tune,” with economists expected to address the committee before anything is advanced for the 2016 legislative session.
Several Democrats on the committee quickly expressed concerns that the swap would disproportionately hurt poor people, who spend greater portions of their incomes on sales taxes than wealthier residents do.
“Poor folks spend eight times more of their income on sales tax that wealthy or folks who are not in poverty,” said Rep. Randolph Bracy, D-Orlando. “Would I want my property tax lowered? Absolutely. But shifting it to sales tax concerns me.”
If the state eliminated all property taxes, committee records indicate the state’s sales tax would have to go from 6 percent to 12.72 percent to cover existing state, local, school and special district expenses.
If a “super” tax exemption is imposed on the first $1 million of any property’s appraised value, which would cover 98 percent of all residential and business property in the state, the sales tax would have to be increased by 4.93 percentage points. The sales tax would have to grow 4.36 percentage points if the exemption covered the first $500,000 of all property, which would be enough to keep 95 percent of all property owners in Florida from paying a property tax.
The committee is expected to also review the impact on state and local revenue before any measure advances, Gaetz said.
Rep. Bob Cortes, R-Altamonte Springs, said the committee will need to look at the potential impact on local governments along the Georgia and Alabama lines, noting there may be an increase in Floridians opting to cross the state lines to do their shopping.
But Rep. Charles Van Zant, a Keystone Heights Republican who for years has wanted to eliminate property taxes, said Florida would become a more-desirable place to move if it combined getting rid of property taxes with its lack of a personal income tax.
“All ships would rise,” Van Zant said. “Now is the time to do it, not when we have another economic upheaval.”
Van Zant added that the state could slowly implement the swap over a four- or five year period so as not to “shock” the economy.
Seeking to address Democratic concerns, Rep. Matt Caldwell, R-North Fort Myers, said poor people could avoid taxes since the state fully exempts most foods, rent and medicines from the sales tax.
“Under this type of proposal, if you are truly poor you can actually live tax free in the state of Florida,” Caldwell said. “If you are only buying the things you need, and you no longer have to pay any property tax, you can live exclusively tax free in the state of Florida.”
Rep. Hazel Rogers, D-Lauderdale Lakes, said she hopes as the committee delves further into any of the concepts, it also considers the impacts of a higher sales taxes on renters and seniors on fixed incomes.
Rep. Jay Trumbull, R-Panama City, said with lowered or no property taxes, “hopefully” landlords would reduce rent and more people would seek to become homeowners.
“But more so, I think we need more people in the state that are paying sales tax, reducing the cost of the burden that people are paying in property taxes,” Trumbull said. “And hopefully we’re adding an extra focus on folks buying property and saving up for that.”
–Jim Turner, News Service of Florida
KB63 says
This is so disturbing. Who wins here? The rich, the rich who own beautiful homes & rentals. They no longer pay property taxes and what they spend a year on sales tax won’t even come close to what those property taxes would cost them. Yet the poor & middle class, many that don’t own real property, are going to spend over double in tax for everything they buy? Oh wait, if your really poor you can buy only food that isn’t taxed and save money! This is the rich get richer and the poor get poorer at it’s finest. Anybody pushing for this needs to be out of office.
David B says
This would be the best thing to ever happen, and another way to tax the wealthy. I for one never shop for clothes. If I I do, I go to the Salvation Army. It’s not that I can’t afford nice clothes, it’s because I don’t need name brand clothes.
David B says
This would be a great ideal. I do all my clothes shopping at the Good Will. It’s not that I can’t afford name brand clothes, it’s because I don’t need it.
Anonymous says
Right On KB63!
The truly wealthy do not spend their the big bucks in their “off shore” accounts in the USA. They buy their yachts/designer clothes/automobiles/jewels, etc. in other countries to avoid sales taxes in the USA! They use every loophole to avoid paying federal income taxes. . . and now our horrific right winged legislature wants to take away the taxes for their mansions!
Remember these outrageous proposals when you go to the polls! We need a big change in Tallahassee!
Sherry E says
Right On KB63!
The truly wealthy do not spend their the big bucks in their “off shore” accounts in the USA. They buy their yachts/designer clothes/automobiles/jewels, etc. in other countries to avoid sales taxes in the USA! They use every loophole to avoid paying federal income taxes. . . and now our horrific right winged legislature wants to take away the taxes for their mansions!
Remember these outrageous proposals when you go to the polls! We need a big change in Tallahassee!
Sherry E says
In addition. . . this would be disastrous for our small business owners! Doubling the sales tax in our state would cause everyone to buy everything in other states or on the internet.
I cannot imagine landlords “voluntarily” lowering rent if property taxes were removed.
This lame idea is just another way of lining the pockets of the wealthy while continuing to grind the middle class and poor under the boots of the fascist “tea party”!
mel guillory says
No property tax and buying most things online such as E-bay with no tax collected will bankrupt Florida! What type of Idiots do we have in Tallahassee? Stupidest idea I have heard of in awhile……
K Chong says
this would kill all small business in Flagler, no one would shop in the county
m&m says
I’m for a national sales tax. Get rid of income taxes and the people who don’t pay their fare share. That way everyone pays their share.
Giada says
Now i know we’ve got more dumb idiots then I thought up there.
tampa native says
Another regressive tax that hits the working folk and poor more than the Upper Class. There are just somethings you cannot buy second hand that would be taxed. I am sure the tourism industry supports this (NOT). Come to Florida, we have a tax for you on your rental car, your hotel room, and now a sales tax at 12-13% of your purchases of goods and services that are not groceries or prescription drugs. Don’t forget the state taxes on communications like cable, cell phone, electricity, water etc. Those will probably have to go up too. I might drive to Georgia to buy my next car then. Need to buy a boat, go to Georgia. Need to buy clothes, go to Georgia.
Freddy says
This is an idiotic idea. Disabled veterans or disabled senior residents who own their own homes in the lower income bracket are exempt from property taxes. So now you will double their sales taxes when they buy something with their measly pensions and social security. This will only benefit the rich and again punish the lower income people. Real poor people might not even own properties so what benefit do they get from this assanine proposal?
Obama 2015 says
Anyone still want to vote republican? We are going to ask tourists at Disney and and the Daytona Speedway to pay 12% on beer and tickets?
Taxes are low enough in Florida. Just leave it as is.
Nancy N. says
Just another example of GOP trickle down economics…only the only thing that trickles down is brown and stinks.
Caldwell is living some sort of insanely masochistic spartan life if he thinks food and rent are the only thing that people need. I mean, is he in the habit of showing up for work naked everyday? Does he walk to work? Does he buy shampoo, shaving cream, soap? And I REALLY hope he buys toilet paper…..
In short, no, you absolutely cannot live sales tax free by buying just necessities in a state where food and medications and rent are exempt. Many, many basic necessities of everyday life are taxable: vehicles, hygiene items, clothes….
And I don’t know what Trumbull is smoking thinking that landlords will lower rent when their property taxes go down, but pass the pipe please because it’s obviously some good stuff! Landlords will have ONE response to lower property bills: CHA-CHING!!!!
Ashley says
I’m a homeowner here locally and pay over $5,000 annually in taxes so the dumping of property taxes would surely be to my benefit. However, even I disagree with this. Not only does it disproportionately effect the poor, it also is going to have a negative effect on spending as a whole thus negatively effecting our economy. I know I’d be less apt to spend my money knowing sales tax was so high.
Sherry E says
Matt Gaetz . . . the committee head. . . interesting that apparently he was arrested for DUI in 2008 but the case was dropped and record sealed. . . take a look, could it be true?
http://florida.arrests.org/Arrests/Matthew_Gaetz_3320805/
Ava Marie Gallagher says
At first I thought this was a joke. But dear God in heaven what is wrong with our legislators?
Anonymous says
Not a good idea. Unlike the Fair Tax this would harm those with the least $ the most. In the Fair Tax everyone gets a pre-bait of the taxes they would pay for the nessecitys of life. Here this just taxes the poor to give to landlords.
tulip says
We would have no choice but to spend the money because almost everything we buy now is already sales taxed and the new laws are now telling the internet stores that they have to charge the sales tax no matter where the order comes from.
Landlords aren’t going to lower the rent because they will now have to pay even more in sales tax. If someone can easily afford a high property tax rate, then they have no problem getting rid of property tax and could well afford the higher tax rate. Someone who pays a lower property tax because they can’t really afford a higher expense, gets hit much harder with the ability to pay a higher sales tax. A wealthier person can very very easily afford $13 on a hundred dollar purchase; A low income person would find this very hard and would have to sacrifice another necessity.
Just imagine 13% on a car or other very expensive things. And how would the state decide how much the county, cities and towns get back so they can run things? This is insane!!!! However it would be one way of decreasing the population of Florida LOL!!
Dave says
Just another help the rich get richer program and screw the middle class. . What’s next a state personal income tax,
Confidential says
Who would benefit with this ridiculous proposal? The wealthy of course! Be aware that depending the location in Florida the same size home pays up to 10 more times in taxes than yours and mine.Their homes ocean and water front with pools tennis courts will pay NO taxes and that luxury tax revenue will be disseminated among the rest of us overburdening our pockets with every purchase and also will scare away our tourism that definitely will visit elsewhere these high taxes are not imposed in their purchases. More tourism geared business will close generating more unemployment! Have these GOP legislators lost their already non functional minds? Do they smoke the same stuff as our school board, Pierre?
Nancy N. says
Walrus, there are so many misconceptions in your statement about “most worked hard to attain their status…” that I almost don’t know where to begin.
Your statement seems to suggest that people get wealthy because they are somehow more worthy than the poor peons. No, in most cases the wealthy didn’t work hard – or at least any harder than the rest of us. What they did do was win the lottery on where and when they were born, and to what parents. Most wealthy people were born into situations that have given them slight edges their whole life in one way or another – educated parents, good schools to go to, financial and physical security so they aren’t growing up stressed or in danger. A large number were born with wealth, so they haven’t even attained anything. They’ve just inherited it by an accident of birth.
Subsidies to the wealthy and their businesses make up a huge portion of the federal budget, while their political hacks in the GOP fight tooth and nail against anything that could benefit the lower part of the economy: labor laws, entitlements, higher taxes on the 1%, affordable healthcare. THAT is why people resent the wealthy, because they conduct themselves in this country with a massive attitude of “I’ve got mine, give me more, screw the rest of you, you shouldn’t get a penny.”
D says
Well put in both statements Nancy N. It states everything I thought as I read that article and some of he replies. People need to read and think harder instead of jumping on the bandwagon saying that’s a great idea then when it is turned into reality they moan and complain about what a bad idea it was. Kind of like the whole Donald Trump fiasco its all fun and games till he’s president and his big mouth gets us bombed off the map.
The rich step on the poor just to make another million dollars they don’t need.
Sherry E says
As usual. . . excellent comments Nancy N!
I also am stunned at how naive some people can be. Sadly, wealth in the USA is somehow celebrated and revered no matter how it is attained.
I would add that even very wealthy Presidential candidates like Mitt Romney are responsible for laying off thousands of American workers. . . while hiding their millions in secret accounts in other countries to avoid supporting the USA by paying their fair share of taxes like the rest of us. Donald Trump used our very lax bankruptcy laws to declare corporate bankruptcy a maximum (for the time period) FOUR times! Which means, thousand lost their jobs and his creditors were cheated out of the money his company legally owed them.
A majority of the wealthy have made decisions causing Millions of American jobs to be “outsourced” and sent to other countries. . . in order to utilize the “cheapest” labor possible! They have placed maximizing profits and lining their own pockets FAR ABOVE sustaining an American middle class and loyalty to the American worker!
The disparity of income. . .and therefore POWER. . . between the top 1% and the rest of the citizens of the USA has grown to the point that it is absolutely destroying our country!
Sherry E says
And now for some actual facts and analysis. . . This from the Business Insider on how the Disparity of Income is destroying the United States. . . the entire article is worth a read and deep consideration:
http://www.businessinsider.com/inequality-and-mobility-in-the-united-states-2013-7
The “American Dream,” that you can succeed regardless of the circumstances of your birth, is a fundamental part of the United States’ national identity. But other countries are way better at it than we are.
A new paper from Miles Corak featured in The New York Times finds a disturbing trend in America: that increasing inequality plays an increasing role in determining where people end up, and that hard work means less. People at the bottom of the income ladder are more likely to stay there in the United States than in many other countries around the world, and those at the top often remain rich.
Howard Duley says
Is it humanly possible that politicians could be this stupid. Well I guess by reading this article it proves the point.
David Smith says
The American Dream of home-ownership is the “greatest lie ever told” because of property tax. Your not the owner until you make the last payment, when do you make the last property tax payment? Its absolutely ludicrous to call people that have to pay the State to keep what the have owners. The State needs to quit lying to the people and just come out and admit they wont let the people own what should be their homes.
The most significant threat to the security and well being of my family is that the State will take what should be “our home” if we cant pay for their jobs and retirement benefits with property tax. At least with a sales tax you pay it and your done, but you can never be free, you can never have your liberty, so long as the government is always threatening to take your residence if you cant pay them with property tax.
Exempt food and medicine and tax luxuries at a higher rate if your concerned with the poor. Talk about the poor, there is no tax more regressive than property tax. One person with no income having to pay property tax has a tax rate that approaches infinity. Mathematically this means that one such person would have a higher tax rate than the combined tax rate of every one in the country paying income tax.
I’m poor living on a fixed income and I would not care how high the sales tax or even income tax would have to be in order to eliminate homestead property tax, for at least, I would be able the have the security and liberty of actually owning what should be “my home”.
The moronic comments proceeding me that criticize this proposed change show a complete lack of rational and moral fortitude. Only a complete idiot can make the assertion that the way things are now allows for home ownership and doesn’t threaten those that need the security of a home the most.