Should Florida End All Property Taxes?

If Florida eliminates all property taxes for homeowners - a proposal that is actually being discussed by legislative leaders, the average homeowner should save about $3,000.

To make up for that loss, the politicians would add 2.5 cents to the state’s 6-cent sales tax. Now, let’s do some math. If a person would buy $120,000 worth of taxable items make up for that $3,000 they had been paying the state government.

Mike Thomas of the Orlando Sentinel writes that he and his wife don’t even bring that much home, so this proposal would be a boon. Who else would make out like bandits if this passed?

The big winners would be real estate agents, speculators and developers. The Central Florida housing market has been flat since November 2005, and of all the area’s in the state, this is one that’s in decent shape.

Conversely, the South Florida real estate market is one flush from going down the drain. Home prices are so out of control that people are bailing for cheaper states, particularly middle-class families. That is a big reason behind the drop in school enrollment in urban counties.

Housing costs are decelerating Florida’s growth, and this property tax plan is designed to get the buzz back by slashing home ownership costs, even for those who live in multimillion-dollar mansions who don’t need depend on Florida mortgage loan payments.

But someone still must pay for cops and schools. This plan passes the extra sales-tax cost on to visitors and low-income residents. Visitors pay about 20 percent of the sales tax. These are the same people we just hit with an increase in the resort tax to pay for a $480 million arena.

It’s all good and well to gouge the tourists, but like everything else, there exists a breaking point. When that nice family from Ohio sees an extra 15 percent added to its hotel bill, we might be close to it.

As for lower-income residents, they pay a much higher percentage of their income in sales taxes. Not exactly helping their cause to qualify for the Florida mortgage they need to buy a home, now is it?

With this change, Florida would set a new standard as a regressive tax state. This proposal comes just after Jeb Bush and the Legislature eliminated the intangibles tax, which targeted wealthy residents.

I’m not saying we gouge the rich, Thomas insists, but we jettisoning any semblance of fairness with this plan. And lest we forget, our economy depends in large part upon the little people.

This property tax idea would be dangerously seductive if placed on a ballot as a constitutional amendment. But ultimately, it would drive business out of the state or onto the Internet, calling into question projections about what the tax would raise.

Sales-tax collections are volatile and subject to downturns. The first reaction of politicians in a budget crisis would be to increase taxes on property not eligible for homestead exemption. Hit those least likely to vote. Taxation without representation is a good thing!

Republicans already have put this state in fiscal jeopardy by subsidizing homeowners insurance on the coast. When we get slammed and go billions of dollars in debt, the logical bailout would be the sales tax. Maxing it out now precludes that.

This plan narrows a tax base that already is too narrow. It is time for thoughtful deliberation. The place to begin is spending. One good idea lawmakers are looking at is a cap on non-homestead property taxes, tying increases to inflation and population growth.

It makes more sense to include primary homes in such a cap than to eliminate them completely.