Democratic Plan for Florida Property Taxes Released

Florida Senate Democrats have crafted a tax reform plan that would boost taxes for homesteaders, while cutting taxes for commercial property and second-home owners.

Released March 27, the multi-pronged proposal calls for $1.1 billion in tax cuts this fiscal year.

It is the first plan to emerge from state senators. It joins plans already making their way through the Florida House. But, unlike the House proposals, the Senate plan does not hike sale taxes to compensate for property tax cuts.

“We think a sales tax hike would devastate Florida retailers,” said Senate Democratic Leader Steven Geller, D-Hallandale Beach, who co-authored the proposal. “We think a sales tax increase would benefit the wealthiest of Floridians.”

Instead, the Democrats’ plan calls for the homestead taxation on property to climb from 2.4 percent to about 5.4 percent. The plan allows Florida home mortgage holders to take up to $250,000 of exempted value when upgrading homes. For those who are downsizing, the exemption is unlimited.

The ability to port tax savings into new homes has broad support among many local government officials, but the practice has been panned critics as being unfair - and potentially unconstitutional - for new arrivals to Florida.

Under the current homestead exemption - which limits the rise in assessed value to the consumer price index, now about 2.4 percent - the taxable value of a $300,000 home could rise to $307,200. Under the new plan, it could rise to $316,200.

“There would be a little bit of an increase. However, if you want to make portability constitutional, you have to do this,” Geller said.

The Democrats’ plan also caps valuation hikes to 10 percent on all commercial and non-homestead residences and offers $338.5 million in first-time homeowner tax breaks by 2012.

At the same time, the plan calls for a rollback on local government taxation to fiscal year 2006 levels and caps future tax growth for three years.

“This plan isn’t a shell game, shifting the burden from one group to another. This plan is real reform, representing the broadest, the fairest, and the most dramatic rate reductions for every property owner [and future Florida mortgage loan holder in the state],” said Senate Democratic Leader Pro Tempore Frederica Wilson, D-Miami. “In this lifeboat, everyone gets the same paddle.”