Sunday, February 25, 2007

The Sales Tax Shift

Carnival Corp reported a billion dollar profit in 2002.They paid no corporate taxes to Florida. The same holds true for Saddlebrook Resorts and Verizon Communications. Skyboxes in sport arenas are not taxed. An estimated $700 million in tax revenue is lost. Every Florida sports team receives a $2 million-a-year tax exception. The franchises are pushing for an extra $2 million. Cause it's hard being a pimp.

In 2003, Florida lost an estimated $1.2 billion in tax revenue. The corporate tax is only 5.5 percent of net income. 98 percent of companies avoided paying to tax.

Jeb Bush pushed for HIV patients to use cheaper drugs. Bush was angered when the state legislature used $500 million surplus for school funding. Florida ranked 49th in public school funding in 2005.

Now Marco Rubio's office has sent Peer Review their sales tax press release. There are a few things that bother me.

For the first time, Medicaid revenues would be placed within the revenue growth limitation.

This legislature isn't serious enough to deal with rising Medicaid expenses. What they would love to do is make cuts to the poor and privatize the system. That would be a disaster. It would be in total character. The telecommunications bill is a perfect example of how easily the legislature is swayed by lobbyists.

5. The constitutional amendment would also limit the continued rapid expansion of local government by containing millage to a rate that produces the same tax revenue as was generated in the previous year plus population growth and inflation, excluding new construction and annexation. The revenue cap may be exceeded through a unanimous vote of the governing body.

6. School districts would not see their budgets reduced under the House’s plan. The future growth of school district budgets from property tax revenues would be limited by the amendment, but state government could choose to put more state revenue into schools.

Counties decide millage. It is how properties are appraised to be taxed.

The property tax rate is often given as a percentage (amount of tax per hundred currency units of property value). It may also be expressed as a permille (amount of tax per thousand currency units of property value), which is also known as a millage rate or mill levy. (A mill is also one-thousandth of a dollar.) To calculate the property tax, the authority will multiply the assessed value of the property by the mill rate and then divide by 1,000. For example, a property with an assessed value of US$ 50,000 located in a municipality with a mill rate of 20 mills would have a property tax bill of US$ 1,000.00 per year

There are several bills in the legislature wanting the make sure the millage is not more than 3 percent of the Consumer Price Index. Rubio is pushing for abolishing property taxes. The voters must approve it. The chances are extremely good they will.

I wrote before that there would be a tax shift if the legislature deals with property taxes. Rubio picked the option that conservative think tanks have been preaching for years. Sales tax. The funny thing is Florida's main tax revenue is sales taxes and it's not cutting it.

The sales tax will go up 2.5 percent if voters abolish property taxes. Counties rely on property tax money to pay for schools, teachers, polices, firefighter, etc. Counties will raise sales taxes to make up the lost revenue. Lower income people will be hit the hardest. It certainly won't be Carnival Cruises making up the difference. There are enough sales tax loopholes for corporations to use.


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