February 18, 2013

Movers & Shakers: TaxWatch exec resigns abruptly

H. Steven Hammond, who has been the executive director of the TaxWatch Center for Smart Justice since May, has resigned, effective immediately.

“I feel it is time for me to move on to pursue other interests and opportunities, not the least of which is further commitment to prison ministry,” the management executive and consultant stated in a press release.

Florida TaxWatch, a private, nonprofit, non-partisan research institute, will be conducting an “extensive search,” according to the release, for a new executive director over the next four months. In the meantime, Robert Weissert, vice president for research and general counsel, will be in charge.

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February 01, 2013

Working group: Raise sales tax to 6.34%, scrap communications tax

A work group has officially recommended that Florida do away with its “Communication Services Tax” and replace the $1.5 billion in revenue by raising the state’s sales tax from 6-percent to 6.34 percent.

The communication services tax, which is levied on things like home phone service and cable television, comes in at an average of about 14.21 percent, according to the Department of Revenue, which led the working group.

In a Jan. 31 letter to Gov. Rick Scott and Legislative leaders, members of the work group recommended increasing the state’s sales tax and repealing the CST in order to level the playing field in the marketplace.

According to estimates from the working group—which consisted of four members from the communications industry and four representatives of local government—the proposal could save money for some consumers.

Those estimates, however, come from a government affairs firm that represents several major telecommunications companies. Telecoms have long pushed for changes to state taxes on their products and services, and could stand to save millions of dollars under the change.

According to the numbers presented to the work group, a “typical” household might save $190 per year by eliminating the CST and paying higher sales taxes. Small businesses could also save money. The Department of Revenue said that it did not have appropriate data to conduct an independent study and that further research needed to be done to figure out the full pocketbook-impact of the recommendation.

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January 09, 2013

Scott floats new tax break for manufacturers

Gov. Rick Scott is planning to cut taxes further for manufacturers in the coming year as a mechanism for creating more jobs and boosting the state’s manufacturing industry.

Scott announced Wednesday that he will seek a new sales tax exemption for manufacturers that purchase industrial equipment and machinery.

“We have 17,500 manufacturing companies in Florida today that employ more than 300,000 Florida families,” Scott said in a statement. “In the upcoming legislative session, we are committed to building up Florida manufacturing jobs by eliminating the tax barriers on companies who purchase equipment.”

Currently manufacturers already enjoy a tax exemption on machinery they purchase, but only if the machinery helps improve productive output by 5 percent annually. In 2012, Scott and the Legislature cut the requirement for productive output from 10-percent to 5-percent, saving manufacturers an estimated $46 million per year.

Scott is looking to eliminate the increase-in-production requirement altogether, allowing all manufacturers to purchase new equipment tax-free. Scott said the provision will make Florida more competitive with other states that don’t tax manufacturing equipment, and will boost exports.

“Eliminating the barriers on investment for our manufacturing industry will also benefit our ports and the many small businesses that support manufacturers,” Scott said in a statement.

It’s not yet clear how much money businesses will save from this tax break, although a similar proposal last year by Sen. Jack Latvala, R-Clearwater, was estimated to cost the state $153.4 million per year in lost revenue. That proposal did not pass, although a smaller tax break for manufacturers did, perhaps reducing the fiscal impact of this year's proposal.

The proposal to eliminate taxes on manufacturing equipment is part of a general trend—backed by Scott and the Republican-led Legislature—to chip away at the taxes paid by businesses.

In the last year alone, Scott has pushed for hundreds of millions of dollars in tax relief for businesses—ranging from corporate income tax cuts, targeted tax breaks for specific industries and tax exemptions for businesses that move to the state.

In November, voters rejected a constitutional admendment that would have cut property taxes for businesses that own equipment.

Last year, Scott announced plans to raise the exemption for corporate-income taxes further, from $50,000 to $75,000.

Democrats--who generally have voted for Scott's tax breaks--have become more vocal in lashing out at Scott's more recent tax-cutting proposals, arguing that Florida should be spending more on education and less on corporate tax breaks.

"On election night, the people of Florida sent a clear message that they have rejected Gov. Rick Scott's failed priorities and policies which have slashed funding for our public schools while giving hand outs to the corporate special interests who epitomize the broken politics of Tallahassee,"  said Florida Democratic Party Executive Director Scott Arcenaux in November. "But Governor Rick Scott apparently didn't get the message."

@ToluseO

November 08, 2012

Gov. Scott to pursue more business tax cuts in 2013

Gov. Rick Scott is planning to cut business taxes further next year, announcing a new proposal Thursday to raise the exemption on corporate income taxes from $50,000 to $75,000.

 Scott spoke to the Florida Association of Realtors, and said his plan would help cut taxes on about 2,000 businesses. The total tax cut would amount to about $8 million, a fraction of the roughly $2 billion that the state collects in businesses taxes each year.

In his first year in office, Scott and the Legislature raised the exemption from $5,000 to $25,000, then followed up in 2012 by doubling the exemption to $50,000.

One of Scott’s campaign pledges was to eliminate the corporate income tax, which provides about 8 percent of the state’s annual general revenue.

“Today, I am proud to announce that in the upcoming legislative session, we will work to further eliminate the business tax for another 2,000 small businesses,” said Scott. “Everything we do must be tied to helping families get jobs, and eliminating this tax will ensure more small businesses can hire people.”

After Scott’s business tax cuts, more than half of Florida businesses pay no corporate income tax. His proposal this year is a minor step toward eliminating the entire $2 billion in corporate income taxes, a move that, if enacted too swiftly, could severely strain Florida’s budget as the state tries to emerge from the recession. 

The modest proposal for 2013 represents a stark contrast from Scott's first proposed budget in 2011, when he asked lawmakers to approve more than $400 million in business tax cuts. Lawmakers ultimately passed a drastically scaled back tax cut.

Democrats, coming off Election Day victories, immediately bashed Scott for the new proposal.

"On election night, the people of Florida sent a clear message that they have rejected Gov. Rick Scott's failed priorities and policies which have slashed funding for our public schools while giving hand outs to the corporate special interests who epitomize the broken politics of Tallahassee," said Scott Arceneaux, executive director of the Florida Democratic Party.

See part of Scott’s lengthy press release below:

Continue reading "Gov. Scott to pursue more business tax cuts in 2013" »

October 24, 2012

Little attention for $20 million business tax cut amendment

Tucked near the end of a lengthy ballot that features contentious issues like abortion and the Supreme Court is a little-discussed business tax cut amendment hoping to make it into the state Constitution.

Amendment 10 would provide an additional $25,000 tax exemption for small businesses that have less than $50,000 worth of furniture, computers and other so-called “tangible property.”

The amendment has received little attention in recent months because there is little organized opposition and business groups have focused their attention elsewhere. It would primarily affect smaller businesses and provide about $20 million in savings on a tax that generates $1.7 billion annually.

“I think it’s a really positive tax policy for our small businesses in Florida,” said David Hart, vice president of the Florida Chamber of Commerce, which advocated this year for the constitutional change.

The amendment, one of 11 that lawmakers have placed on Florida’s lengthy 2012 ballot, could impact up to 40,000 small businesses next year if it gains the necessary 60 percent of the vote. A clause in the language would allow local governments to expand the savings to some larger businesses, or eliminate the tangible property tax altogether.

Read more here

@ToluseO

October 09, 2012

Conservative think-tank gives Scott an 'A' in cutting biz taxes, gov't spending

When it comes to cutting taxes for businesses, Gov. Rick Scott received an ‘A’ grade from the conservative Cato Institute, which gave Florida’s governor’s high marks for his fiscal policy.

Scott received a ‘69’ score—the highest in the country—on Cato’s Fiscal Policy Report Card, after slashing Florida’s corporate income tax and offering other tax cuts.

While the Cato Institute’s report card refers to the tax cuts as “pro-growth,” the report did not rate governors according to actual economic growth. Instead, “the governors receiving an ‘A’ are those who cut taxes and spending the most,” the report reads.

In the area of job growth, Florida is a middle-runner, ranking 25th in the nation over the last year, under Scott’s economic policies. Florida’s job creation rate is lower than the national average and long-term unemployment is worst in the nation.

Still, Scott compared well against other governors in states that have faced spiraling budget problems and out-of-control spending. Cato gave Scott high marks for “substantial budget cuts” and cutting thousands of jobs from state government, as well as for various business-focused tax cuts.

“Rick Scott of Florida has championed major tax and spending reforms. He has proposed substantial budget cuts, vetoed hundreds of millions of dollars of wasteful spending, and trimmed state employment,” the Cato Institute report reads. “Scott is also determined to give Florida the best economic climate for business investment and job creation in the country.”

For comparison, Gov. Charlie Crist received an ‘A’ grade in 2008, but the one-time ‘Most Conservative Governor’ fell out of favor with the Cato Institute, receiving a ‘D’ by 2010.

In 2006, Gov. Jeb Bush received a ‘C’ grade.

@ToluseO

August 01, 2012

Study: Mitt Romney's tax plan could save millionaires $87,000 and raise taxes on the middle class

Picture 18The nonpartisan Tax Policy Center produced an analysis that incorporates Republican presidential candidate Mitt Romney's plan and has concluded that it could save the rich lots of money and actually cost other taxpayers a little bit more.

Romney wants to slash income tax rates by 20 percent for all taxpayers. And, because the rich pay more in taxes, they would therefore save more. But, in order to ensure that the plan doesn't increase the budget deficit and national debt, Romney says he wants to eliminate tax breaks. But he hasn't named them.

But most of the big-dollar tax breaks disproportionately help the middle class who get write-offs for, say, employer-provided health insurance, state and local taxes or mortgage interest.

Eliminate or seriously cut back those subsidies and it could cost people more money in the end, the report showed, even though it intentionally biased its assumptions in Romney's favor.

So a person with taxable income of $50,000-$75,000 would see an average net tax increase of $641 (saving $984 from Romney's policies, but losing $2,672 from the elimination of tax write-offs and subsidies).

A person with a $1 million or more taxable income would see an average net tax decrease of $87,117 (saving $175,961 from Romney's policies, while losing $88,444). The numbers are contained in the graphic above.

"Our major conclusion is that any revenue-neutral individual income tax change that incorporates the features Governor Romney has proposed would provide large tax cuts to high-income households, and increase the tax burdens on middle- and/or lower-income taxpayers," the authors wrote. "This is true even when we bias our assumptions about which and whose tax expenditures are reduced to make the resulting tax system as progressive as possible. For instance, even when we assume that tax breaks – like the charitable deduction, mortgage interest deduction, and the exclusion for health insurance – are completely eliminated for higher-income households first, and only then reduced as necessary for other households to achieve overall revenue-neutrality– the net effect of the plan would be a tax cut for high-income households coupled with a tax increase for middle-income households."

The Romney campaign has yet to comment. It has refused to this point to give specifics about how his tax plan would work -- that is, would tax preferences he would eliminate. However, Romney supporters are sure to note that the study doesn't include budget cuts, which would offset the need for eliminating tax breaks.

But Romney hasn't done much in specifiying his cuts, either. He wants to boost defense spending. And he has criticized Obama for cutting Medicare in ObamaCare, suggesting he wants to leave this alone. His Social Security plan isn't in depth, either. So savings there are unclear.

President Obama's campaign has weighed in with a study of its own. One focused on Florida and claims that Romney's plan "could result in a tax increase for 7.6 million families in Florida. Second, Romney has made it explicitly clear that he would roll back tax cuts President Obama has signed into law and is fighting to extend, a move that would raise taxes on 18 million working families – including 1.2 million in Florida. Finally, in addition to making the Bush tax cuts for millionaires and billionaires permanent, Romney would add another $5 trillion in new tax cuts weighted to the wealthiest, and says he has a secret plan to close tax deductions and other benefits to pay for it. While the impact of Romney’s plan cannot be known for certain, the Florida households earning between $50,000 and $200,000 a year that might be impacted by Romney’s plan include: 1,115,000 Florida households paying off their mortgages; 1,124,000 Florida households making charitable contributions; 1,319,000 Florida households deducting their state and local taxes; and 1,771,000 Florida households who are not taxed on the health benefits they get through their jobs."

There's a high chance Obama will emphasize the potential problems with Romney's tax plan when the president visits Orlando tomorrow.

The Romney campaign might be willing to ignore this issue, banking on the notion that voters trust Republicans more than Democrats on taxes and deficits. Consider that Obama said he'd cut the deficit in his first term, but instead the opposite happened. Romney's campaign could also be waiting until later in the campaign (Romney technically hasn't been nominated yet at the Republican National Convention) to release more specifics on Romney's timetable.

Eventually, Romney's probably going to have to answer the question: What are the numbers?

A few Republican and conservative tax analysts haven't yet been able to answer that, either. While lacking data to refute the Tax Policy study, some accuse it of liberal bias because it's a joint project between the Urban Institute and the Brookings Institute, which has a reputation of having liberal leanings. However, one of the directors of the Tax Policy Center is Donald Marron, who was picked by Republican President George Bush in 2008 to serve on his Council of Economic Advisors.

Ryan Williams, a spokesman for Romney, Tweeted this about study co-author Adam Looney: "Looney, co-author of @BarackObama's "non-partisan, independent study" was also a senior tax economist in the Obama White House."

The Romney campaign on Nov. 4 had a different view of the Tax Policy Center when it examined Republican rival Rick Perry's plan and called the study an "Objective, Third-Party Analysis."

The Romney campaign followed up later and faulted the Tax Policy Center for not factoring in budget cuts or the value of corporate-income tax cuts. But the center notes that the economic assumptions of the Romney campaign are unprecedented because big corporate tax cuts have never been shown to raise revenue.

"This isn't bias. These are numbers," said Looney. "It's pretty plain math. It really is just algebra."

Picture 1Looney acknowledged that the study didn't analyze budget cuts, which is an even larger and more complicated issue, that could offset the need for eliminating tax preferences in the event of a 20%-across-the-board tax-rate cut. He noted that Congress is already grappling with cutting the budget now and that current revenues aren't high enough to keep pace with spending. That's why they analyzed the tradeoff with tax preferences.

"If you cut tax preferences," he said, "you're cutting basic middle-class benefits." (See the pie chart for the percentage breakdown of these popular tax preferences by type).

Download Tax Policy Center Study

Download Obama Study

 

March 29, 2012

Scott pens letter to New York CEOs: 'Do you like paying higher taxes?'

Gov. Rick Scott’s big announcement on national TV on Thursday? He’s writing a letter to New York’s top CEOs, asking them to move their companies to Florida.

On a much-hyped appearance on Fox News’ Your World with Neil Cavuto, Scott’s big reveal was a letter he wrote to New York’s top 100 CEOs, letting them know that they’d be wise to leave New York’s high-tax business climate and come to the Sunshine State.

His letter begins: “Do you like paying higher taxes to do business in New York? As a former CEO and entrepreneur, I know my answer to that question is absolutely not. After meeting with several business leaders in New York this week and hearing about the issues they face, I am convinced that every company in New York should be doing business in Florida.”

The letter goes on to highlight the various business advantages Florida has over New York.  

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March 28, 2012

Gov. Scott signs economic development package, billion-dollar savings for businesses

Flanked by leaders of Florida's top economic trade groups and agencies, Gov. Rick Scott signed a number of business tax cuts he says will accelerate economic development in the state.

“The passage of my jobs passage is a great example of all of us working together to make Florida the best state to live and do business,” he said Wednesday.

The economic development package includes more than $1 billion in tax cuts for businesses over the next three years. It features broad cuts of the unemployment tax and the corporate income tax, and targeted reductions for manufacturers, private plane repairers, and fruit and meat packers.

Scott said it’s difficult to say definitively how certain targeted tax cuts will lead to job creation, but noted that the package helps make Florida a more competitive state for business expansion.

“If we want employers to hire more people, we’ve got to think like they do,” said Scott, a former CEO. “We’ve got to keep their costs as low as they can. We’ve got to make sure that we’re more competitive than any jurisdiction in the world.”

The public signing is the latest in a public relations push by Scott to shape the discussion about the job he's done as jobs governor.

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March 11, 2012

In Legislature's tax-cutting spree, well-connected businesses win out

TALLAHASSEE -- William Ibarra was pleasantly surprised to learn that the taxes he pays at his small Miami charter flight company would be slashed by thousands of dollars, after the Legislature last week passed a slew of business tax cuts.

Frank Stronach, a billionaire horse breeder whose Gulfstream Park racino has a team of nine lobbyists in Tallahassee, could save millions. He is likely to benefit from corporate tax cuts for his businesses and a $1.2 million tax break carved out specifically for a slaughterhouse he is building near Ocala.

From shop owners, who know little about Tallahassee politics, to the powerful business lobby that thought up many of carefully crafted tax breaks, the Legislature this year proved a friendly place.

The total package of business tax relief approved during the 60-day legislative session that ended Friday totaled about $750 million this year, and more than $2.5 billion over the next three years.

Everyday consumers received a much smaller package of direct tax relief — another back-to-school tax holiday, small homestead exemptions and no tax increases. The Legislature was also less ambitious in providing direct economic relief for struggling homeowners, and delivered bone-deep cuts to several programs.

Backed by businessman-turned-governor Rick Scott, the business-friendly tax plan has been touted as a surefire way to bring Florida’s wounded economy back to life.

“If we put Florida companies in the position where we can outcompete companies in any other state, in any other country, what happens?” Scott asked during his State of the State speech in January. “Jobs are going to grow like crazy.”

 Here's a breakdown of the tax relief measures that passed this year.

--@ToluseO