Wherever there are taxes, there are inequities.
It is the nature of targets and exemptions and a consensus of necessary societal services. It’s what we call “tax policy.” Not all oxen are gored, and not all gored oxen are gored equally. And at some point the law of unintended consequences will inevitably kick in.
The brouhaha over property taxes has been a classic example.
Amendment 10 to the Florida Constitution — aka the “Save Our Homes” Amendment — was passed (by 53.6 percent) in 1992 to keep residents from being taxed out of their homes. It was enacted in 1995.
Its 3 percent-cap legacy has become all too familiar. Most notably, the disparities in the assessed values of identically valued homes can be dramatic. In effect, property-tax payments have shifted from homestead properties that have not been sold in recent years to those that have – as well as to non-homestead properties such as businesses, rental units and second homes. And then add a macro scenario: An uneasy and unpredictable impact on the health of the state economy.
A dozen years, a populist governor and legions of mad-as-hell property owners later, we have a formal reaction from the Republican-dominated Florida Legislature. There’s the rollback-and-cap bill that will punish local governments. And in January, Floridians will vote on the super homestead exemption. Part of the homestead-homeowner calculus will be figuring whether to exercise the option of keeping the “Save Our Homes” cap or not. It will help some; it’s a wash for others. It’s a shell game for everybody.
Ultimately, new home buyers, landlords, commercial property owners and snow birds will continue to wonder what all the ballyhoo is about when they’re still the fall guys in an inequitable property-tax mess.
Which brings us to this: How much longer will we pretend that the find-ways-to- placate-enough-property-owners gambit qualifies as reasonable, adult tax policy?
How much longer do we continue to ignore the 800-pound gorilla of tax pragmatism still lounging in the lanai? And we’re not even talking, although we should be, about a minimal state income tax, the least regressive alternative of all.
We’re talking about the multi-billion-dollar laundry list of sales-tax exemptions, a sizable chunk of which is not for food, prescription drugs, health services and solar-energy investments.
And even though it likely cost Gov. Bob Martinez re-election in 1990, we’re also talking, although not so blasphemously in 2007, about taxing services: from legal to advertising to tax preparation. At some point, a service-economy has to tax itself. Especially, when we’ve reached the point where, courtesy of Speaker of the House Marco Rubio, we were actually considering hiking the 6 percent state sales tax a startling, uber-regressive 42 percent.
And as Florida Tax Watch has noted, this state could reduce property taxes by at least $2 billion annually if Florida collected sales taxes owed on Internet purchases. Florida isn’t even talking to a coalition of states that are trying to arrange practicable, reciprocal relationships.
No, there is no perfect tax. Just perfectly unacceptable reasons not to give meaningful property-tax relief across the board – and to at least limit the inequities.