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Report: Florida has one the nation’s highest business tax burdens

Florida, long-touted as a business friendly state with no income tax, has one of the nation’s highest business tax burdens, according to a new report from a boutique economic consulting firm. 

The report says Florida has the nation’s 6th highest business tax burden, citing high costs for property taxes, sales taxes, public utilities and other fees.  It counters several other studies that highlight Florida’s low taxes and put the Sunshine State as a top place for businesses. 

The report, from Anderson Economics Group, uses a different methodology from most other studies. It calculates the total amount of taxes paid by Florida businesses as a percentage of those businesses’ operating profits. In essence, it aims to calculate the business tax “burden” by comparing taxes to profits. 

“This approach provides a comprehensive, objective measure of the state and local tax burden,” the report states. “We do not weight some taxes more than others, nor do we rely on any subjective judgment about which taxes are better than others.” 

Florida’s combined business taxes in 2011 equaled nearly $40 billion, or about 13.4 percent of “pre-tax operating surplus” (or profits).  Only five states had a higher ratio of business taxes to profits. The national average was 10.2 percent. 

Florida’s high ranking can be traced back to the state’s property taxes and public utilities costs. The property tax burden made up nearly half of the state’s business tax burden. Only Vermont and Maine had higher property tax costs compared to profits. Florida also had the nation’s highest public utilities sales taxes, compared to profits. If taxes are calculated as a percentage of Gross Domestic Product, Florida had the nation’s 3rd highest business tax burden. 

In other areas –- corporate income taxes, sales taxes, unemployment compensation taxes -– Florida’s tax burden was neither in the top 10 or bottom 10 among states. 

State lawmakers have moved to cut various business taxes in recent years, creating new exemptions for corporate income taxes and sales taxes for certain industries. Lawmakers have tried to slash property taxes as well, mostly focusing on homeowners. A constitutional amendment to reduce property taxes failed in a 2012 referendum vote.

Several other reports have given Florida much more favorable figures when it comes to the business tax burden. The Tax Foundation, for example, has ranked Florida as having the 5th best business tax climate. Chief Executive Magazine highlighted Florida’s lack of an income tax in rating the state the 2nd best place for business, behind Texas. 

Gov. Rick Scott has highlighted those numbers and rankings in recruitment letters to top CEOs in New York, Illinois, Maryland and California. Scott has bashed those states for raising taxes and increasing the cost of doing business, and has invited CEOs to book a “one-way” ticket to Florida.

In the Anderson Economics Group study, each of those states has lower business taxes than Florida, when taxes are calculated as a percentage of profits.

According to the study, Delaware’s tax burden of 5.1 percent ranked lowest, while Alaska’s tax burden (25.2 percent) ranked highest.

Read the report here