BlogWood: MT Archives

FL tax system to become even more regressive

We knew this was coming: Jeb!’s drive to kill the intangibles tax, which only affects wealthy individuals with large non-retirement investment accounts, is moving forward. It’s being sold as a middle class tax cut, but it’s only going to help the rich, while ensuring that Florida’s poor continue to bear the brunt of an increasingly unfair tax system.

Calling the intangibles tax everything from "insidious" to "heinous" to a "vampire tax that sucks the bloodlife out of Florida's economy," members of a House committee approved a repeal of the tax on Friday.

The vampire comment came from Rep. Fred Brummer, R-Apopka, the chair of the committee and the sponsor of the bill (HB 963) as he made his case for repealing the tax that has been targeted by Gov. Jeb Bush since his 1998 campaign.

Bush has successfully whittled it down three times so far, but tight budgets the past two years have caused him to drop the effort to eliminate it.

The monetary outlook is better this year, so Bush and Republicans are trying to push through the repeal in a year that they believe the state can afford it.

"We wanted to eliminate it at a time with greater revenue flow, and that time was now," said Rep. Carl Domino, R-Jupiter, who voted for the bill Friday. "The governor wants it to be part of his legacy, so we're pushing it through."

The intangibles tax is levied on investment portfolios worth more than $250,000 for individuals and $500,000 for married couples.

Combined with the minimum payment threshold of $60, the effective exemption becomes $310,000 for individuals and $560,000 for couples. Money in retirement, checking and savings accounts is exempt, however.

While Bush has characterized the tax as one that affects the middle class, a Palm Beach Post analysis of Department of Revenue data found that the tax is paid by the wealthiest 1.3 percent of Floridians, with the average individual payer of the tax having a taxable portfolio of $1.1 million. For married couples, the average taxable holdings affected by the intangibles tax is $2.1 million.

Republicans say the tax is unfair because it doubly taxes people who have made wise investments. A legislative analysis found that the cut would cost the state about $235 million in tax revenue this year and nearly $300 million the following year.

Democrats proposed scaling back the tax rather than repealing it, and they also sought to reduce the state sales tax from 6 percent to 5.75 percent to help others than just the wealthy, but the two amendments were voted down by the House Finance and Tax Committee.

The committee did approve two other tax reduction bills: HB 101, which would create a nine-day sales tax "holiday" for back-to-school shoppers in July, and HB 27, a reduction of taxes that manufacturing companies pay on equipment they purchase to expand their spaceport technology businesses.

Gee, a sales tax holiday. That ought to help. Oh, wait...