Tag: tax

Cutting Corporate Income Tax Unwise, Economist Says
April 20, 2011

Governor Rick Scott has renewed his call for the legislature to adopt big tax cuts even as billions of dollars are being cut from state programs like education and Medicaid. 

“I remain certain that any budget I sign into law will do the following things: reduce the size and scope of government, reduce the cost of government, and pass those savings on to taxpayers in the form of tax cuts,” Scott said in his weekly radio address.

“The budget proposal I sent to the legislature does those three things. I will not compromise on these principles.”

The “no compromise” talk raises the issue of a possible veto of the state budget, the St. Petersburg Times said.

The tax cuts he wants:  "Business and property tax cuts are critical to make Florida No. 1 in job creation. Lowering taxes will attract businesses and jobs to our state. I am confident that, with your help, the Legislature will make the right decision.”

Scott continues to advocate for a cut in the state corporate income tax, even though Florida’s tax is relatively low and so riddled with loopholes that few companies pay it.  

"Slashing the corporate income tax would do little, if anything, to improve an already business-friendly tax structure or to create jobs," FCFEP said in a February report.  "But it would do much to decrease the level of services necessary to support a decent quality of life, which is the foundation of economic development.  (See "Keeping and Modernizing the Corporate Income Tax Will Best Serve Florida; Corporate Tax Cut Would Force More Service Cuts While Doing Little to Create Jobs.") 

So far, legislative leaders have resisted any pressure to adopt sweeping tax cuts.  A prominent Florida economist suggests that they should continue to do so.

“There is not much room for improvement as far as the tax climate in Florida is concerned and trying to be the cheapest date in the country is not going to bolster the number of suitors Florida has,” writes Dr. Sean Snaith, director of the Institute for Economic Effectiveness at the University of Central Florida.                   

“There is very little to win in our race to the tax bottom,” Snaith said in his quarterly Florida and Metro Forecast.  “Those tax revenues could be used more effectively to grow the economy through investment in infrastructure or education.  These things would be far more attractive to business than a marginal improvement in the business tax climate.”

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Lower Budget Gap Due in Part to Previous Program Cuts
September 15, 2010

Floridians can rightly cheer the news that the anticipated budget gap facing the new governor and legislature next year will be only $2.5 billion, instead of the $5.5 billion state economists had predicted earlier.  It means, in part, that the state’s economy is recovering enough that revenues from the sales tax and other taxes are growing more than expected.

But the good news masks the fact that the improved outlook also depends partly on $1.5 billion in cuts made by the 2010 legislature – and that more budget cuts will be on the agenda for 2011.

This means that the next budget will be built on an already-reduced base.  Those 2010 reductions will become permanent unless the legislature adds back the cut money in future years.  

Sometimes budget cuts might conceivably be characterized as “efficiencies.”  But after several years of cuts during the economic downturn, even the projected new speaker of the House of Representatives warns that there’s not a “waste, fraud, and abuse” line item that can be wiped out to balance the budget.

State economists provide a list of 26 Critical Needs that the next budget should fund and 29 Other High Priority Needs that the state normally pays for.  “Critical Needs can be thought of as the absolute minimum the state must do absent significant law or structural changes, and Other High Priority Needs in combination with the Critical Needs form a highly conservative continuation budget,” state economists wrote.

The list (see it here on Page 67) includes replacing federal stimulus funds for public schools, keeping up with Medicaid growth, paying for health insurance for uninsured children, providing services to Floridians with disabilities and those served in programs of the Department of Children and Families, and paying for new students enrolled in state colleges and universities.

These needs are among those that bear watching in the 2011 legislative session.  The options for closing a budget gap of $2.5 billion are limited:  modernizing Florida's tax structure by asking everyone to pay their fair share (which many political leaders say will not be considered); imposing fee increases on those already paying; or more cuts to services, perhaps to some on the list.

 

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Pro Sports Subsidies From State Taxes Continue While Services Get Squeezed
August 30, 2010

Add Florida taxpayers to the list of those subsidizing profitable major league baseball franchises in Miami and St. Petersburg, even if most Floridians don’t realize it.

Financial documents leaked this week show that both the Florida Marlins and the Tampa Bay Rays turned profits in recent years even as they insisted that local taxpayers finance new stadiums.  (Read news stories about their profitability here and here.)

In the Marlins’ case, the cost to local taxpayers for “a sweetheart stadium deal” will be $2 billion or more to repay bonds over 40 years.  The Rays also say they need a new stadium financed in part by local taxpayer subsidies.  Both teams let it be known that they might move to another city if new stadium arrangements weren’t satisfactory.

Meanwhile, thanks to a Florida law enacted in 1991 to subsidize a "new or retained professional sports franchise," the Marlins, Rays, and six other professional sports franchises each receive a check from the state every month for $166,667.  That’s $2 million a year for each team, for 30 years.

Together with $5 million in subsidies for major league teams based in Florida for spring training, these subsidies from state money cost $21 million each year, straight from collections from the sales tax.  In addition, Florida provides a $2 million annual subsidy to the Professional Golf Hall of Fame and $1 million annually to the International Game Fish Association World Center. 

The Marlins, Rays, and other baseball, football, basketball and hockey teams subsidized by Florida taxpayers are each worth hundreds of millions of dollars, according to annual sports franchise valuations by forbes.com: 

Florida Marlins                                  $317 million

Tampa Bay Rays                              $316 million

Jacksonville Jaguars                         $725 million

Tampa Bay Lightning                        $191 million

Florida Panthers                               $159 million

Tampa Bay Buccaneers                    $1 billion

Miami Heat                                       $364 million

Orlando Magic                                  $361 million

In just the last five tough budget years, Florida’s taxpayers will have subsidized these profitable pro sports teams with more than $100 million.  This money leaves the state treasury month by month and is not available to fund priorities like education, health care and health insurance, and other services needed by those caught in the economic downturn.

Subsidies for professional sports teams fall under the guise of “economic development,” where tax revenues are handed out with the rationale that they will create jobs and other positive economic outcomes.  The $21 million annual subsidy to sports teams is one of hundreds of tax breaks in Florida law, costing billions each year, which are seldom if ever reviewed.

Supporters maintain that the state can’t change the 1991 law to eliminate the subsidies because the money supports bonds sold to finance pro sports stadiums.  Other money could be substituted, however, if legislators decided that the Florida had more important priorities.

Many tax breaks merely provide government subsidies to profitable businesses or provide money to employers who would have hired new workers anyway.  (See “Tax Breaks Shift Money to a Few Winners and Compete for Limited State Revenue.”) 

Sport subsidies are opposed by most economists.  “There appears to be little or no evidence for any net beneficial economic impact of public stadium financing,” concluded an economist’s study for the James Madison Institute in Tallahassee.

An examination of a multitude of national studies on tax breaks for sports teams reached the same conclusion.  “Sports subsidies cannot be justified on the grounds of local economic development, income growth or job creation.”

“The fact that sports subsidies continue to be granted, despite the overwhelming preponderance of evidence that no tangible economic benefits are generated by these heavily subsidized professional sports facilities, remains a puzzle,” said the authors of the study for the International Association of Sports Economists.

Part of the explanation may be “simple collective foolishness when it comes to matters of the heart like sports,” the economists said.

One former owner of the NFL’s Philadelphia Eagles, Norman Braman of Miami, drew his own conclusion when talking to the Miami Herald about the Marlins’ profitability while the team sought taxpayer subsidies.

“The taxpayers are stuck with paying [the money for the stadium] back.  It shows [the Marlins] should have built the thing themselves.  It shows the taxpayers are a bunch of suckers.”

 

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