The concepts presented in this post are based on a report by Lloyd Dunkelberger with The Ledger’s Tallahassee Bureau.
The Florida House of Representatives unveiled a new tax plan some call bold and some call bad. The proposal is complicated as described in the media but here are the major concepts being considered:
- A nearly $6 billion reduction in property taxes this year. Those savings would be taken from City and County governments. Schools would be initially exempt. That would mean all homesteads from the most modest to those of multi-million dollar opulence would pay no taxes.
- State sales tax would be raised to 8.5% (plus any local option tax in place)
- The plan would force local governments to rollback taxes to the 2000-01 levels while adjusting for population and inflation. Such a move would reduce tax rates by 19% with the average statewide homeowner realizing a $433 cut and the average commercial property owner a $3,353 reduction.
Approval of such a drastic shift in revenue collection would require voter approval. The House plan calls for lost money from exempting homesteads to be replaced by the increased sales tax collections which would be redistributed to local governments by an as yet undetermined formula.
Local governments say the plan could cause significant cuts in local services. Others say that increasing the state’s sales tax places a greater financial burden on the poor.
What happens when sales tax collections fall unexpectedly? Who makes up the shortfall?
What do you think? It the tax swap hocus pocus? Smoke and mirrors? Good? Bad?
Tell us …
Obviously a higher sales tax is going to impact those who can least afford it. Property taxes are fair in that they tax you according to what your lifestyle.
The real problem is the recent escalation of property values due to the housing and real estate boom. Most of the boom might be “controlled” growth .. but its still out of control overall.
Whats wrong with the various governments rolling back their millage rates to offset the impact of increased property values. If gov’t needs X number of dollars to run .. then adjust the property tax rates to allow for the increases.
I disagree that “property taxes are fair in that they taxs you according to your lifestyle.” My family of 5 moved here in the midst of the housing boom and could not find adequate housing within the city limits for less than $250,000. Sure we could by a fixer-upper for $200,000, but then we would be right back at $250,000. The property taxes in Winter Haven on a $250,000 are almost $4,000 per year. I would’ve loved to buy a house for a lot less money, but couldn’t find anything that wasn’t a 20 minute drive from work and school (we only have one car). I don’t think property taxes are really that fair. At least with sales tax, you only pay taxes when you buy something (food and prescriptions are exempt, clothes for school are exempt during a specail before school time). With sales tax, the burden is also shared by visitors, plus property taxes would still be paid on 2nd homes.
I disagree that “property taxes are fair in that they tax you according to your lifestyle.” My family of 5 moved here in the midst of the housing boom and could not find adequate housing within the city limits for less than $250,000. Sure we could by a fixer-upper for $200,000, but then we would be right back at $250,000. The property taxes in Winter Haven on a $250,000 are almost $4,000 per year. I would’ve loved to buy a house for a lot less money, but couldn’t find anything that wasn’t a 20 minute drive from work and school (we only have one car). I don’t think property taxes are really that fair. At least with sales tax, you only pay taxes when you buy something (food and prescriptions are exempt, clothes for school are exempt during a special before school time). With sales tax, the burden is also shared by visitors, plus property taxes would still be paid on 2nd homes.
I totally agree with cutting the taxes on homes and raising the sales taxes. A great number of homeowners are totally strapped because of such high taxes on their homes and especially those in the city. My taxes on a little 1600 sq. foot house located in the Gates is $3,155 per year (located in city) as to the home I owned on 8th Terrace at 3200 sq. feet at $980 and in the county. I will have to sell when I retire because I couldn’t afford such taxes along with the insurance on the home. What about people who are families of 4 or more? They must live hand to mouth.
I do not favor the “new” tax proposal for this reason.
The taxes collected are the funds used for schools, police, fire and emergency people as well as improving the other facilities that make living in Winter Haven, Polk County or even Florida safe and enjoyable. Does this proposal mean that the people who buy a winter home and come down and spend a month or two are only obligated to pay the proportion of the services that are covered by the 1 or 2 months of sales tax that they contribute…while those of us who are year-round Floridians bear the brunt of the cost of maintaining their property.
On the other hand I feel that the people who are renting should also be paying their fair-share, as it is now they are living in a taxed home and unless the landlord is passing that tax on to them then they are also taking advantage of those of us who pay their whole share.
Either way we are going to pay taxes — and while the sales tax option initially sounds like you might save, think of adding an additional $1500 to the price of that new car, or an additional $75-100 on that refrigerator you need — with the sales tax option,those are going to be the reality. The simple fact of the matter is that it costs money to provide police, fire departments, schools, roads, libararies, etc. and our taxes are the way we pay for them — it’s just a matter of whether the revenue comes from sales tax, property tax, income tax, special assessments, etc. As for rolling back taxes to the 2000 levels, how many of us are willing to take a pay cut to what we were making in 2000?
I wholeheartedly am in favor of increasing sales tax while decreasing property tax. Property taxes are very unfairly assessed due to the recent huge increases in property values. New homeowners are paying property tax based upon current assessed value, while folks who have owned their homes for years are paying based upon values set sometimes decades ago because of assessments being locked in place by the “save our homes” provisions of the homestead exemption. This results in huge differences in taxes paid on similarly valued property.
The fact is that the state, counties and cities are seeing gigantic increases in property tax revenue, all on the backs of people who have recently purchased or built houses. A far more equitable plan would be to tax people based upon purchases through increased sales taxes.
I agree with with the new tax plan for Florida.
It’s the “FAIR TAX” on the State level.
As a result, maybe local governments in Florida will become more efficent.
Isn’t there a compromise positon somewhere between complete abandonment of property taxes and such a profound increase in sales tax?
The person owning the beach front home can afford property taxes in line with their discretionary income more painlessly than the renting minimum wage worker with no health insurance or retirement benefits can afford increased sales taxes.
These are stereotypes, I realize. Abandonment of property taxes in favor of increased sales tax will harm people that are already struggling.
I LOVE THE IDEA! THOSE WHO OWN MORE THAN ONE HOME WILL STILL PAY, BUT NOT AS MUCH, OUT OF STATE OWNERS SHOULD STILL PAY THE FULL AMOUNT.
AS FOR THOSE WHO RENT ONLY, THEY WILL PAY THROUGH HIGHER RENT FEES OR THROUGH THE ADDITIONAL SALES TAX.IF THEY ARE SO POOR THAT THE BULK OF THEIR REMAINING INCOME IS SPENT ON FOOD THEN THEIR ACTUAL COST OF LIVING WILL GO DOWN.
I BELIEVE IT’S OBVIOUS THAT THE SHARED STATE FUNDS WILL NEED AN EXTENSIVE “NO COUNTY LEFT BEHIND” REVIEW.
HEY! WHAT WE HAVE BEEN DOING FOREVER! ISN’T WORKING WELL. LET’S TRY SOMETHING ELSE AND LET THE SNOWBIRDS HELP!
There may be some benefits to this plan but the truth is that either way we are going to pay. The major problem is that the majority of people who buy homes buy without ever thinking beyond the current costs because the real estate agents, bank, and brokers do not want to loose deals and tell them they need to look for something less expensive or what to expect. This can easily be seen in St. Lucie county where the last big real estate boom was. People bought houses and assumed that the small community would never need to increase taxes but does anyone take into account that beacuse of the influx in population new roads and schools have to be built. People need to be educated on the area they are buying and be aware that yes taxes will increase and based on growth that will cause a higher increase. The plan has good points but needs to be refined so that it really makes sense and new homeowners need to be educated on everything before they buy. This is not being done and that is why our foreclosure rate in this state is one of the highest in the country. I am crossing my fingers that they look into this and really fine tune this to work best all around.
I am still trying to understand how in say 1975 you could buy a home selling at $27,000 (which sells for about $300,000 south of us).At that time your deduction was $25,000 Our taxes were lower and there were less people living in an area then. Yet we built schools, highways, paid government agencies like the police and fire departments etc. We built cities and they grew well. Look at Miami and all it’s growth from 1960.
In the last few years the taxes have gone up so much. I will use Port St Lucie as an example. In the last few years they had building permits between 5,000 to 8,000 a month. This went on for a long time. Besides the 8,000 to 10,000 for impact fees when they bought a new constructed home their taxes are very high. If thy are paying 4,000 in taxes and every one else is . Where is that money going.
Even here with more people living here and each paying more in taxes why are we not seeing more growth in what we are paying for.
Things have not gone up that much in cost. The road should not have any pot holes we should have a policeman on every corner. The sacools should never be short funded. With all the money why are there homeless. There is no affordable housing. And Polk County is about the cheapest you can live in.
So would someone please come clean and account for all the money the goverment is collecting from us. They need to account to us where it is going. It is our money and we should know where it is being spent.
That $433.00 is to make up for that extra 2 and 1/2 cents. for every purchase.
We are taxed for everything. Where is that 6% sales tax going on everything else that we pay for on top of our property taxes.
the roads have alot of pot holes, there are no side walks on most roads. There is no beautification put anywhere unless the developer pays for it.
What is our money going to.
My question is, does this property tax decrease benefit those who own property in Florida but reside elsewhere???
It is our understanding that the exemption would only apply to legitimate homestead and property owned by those who reside outside of Florida would continue to be taxable.
I am very
concerned about the possible passage of a constitutional law that would
replace the property tax with a sales tax. Under the House plan Polk County
would lose $78 million in revenue. In this year’s budget ad valorem taxes
generate $245 million. $77M is used by the BoCC to fund our Constitutional
Offices, Public Safety and Administration. $126M is for the Sheriff’s
Department. $29M is for roads, and $13M is for parks and libraries. A $78M
reduction is a decrease to our budget of 32%. If we reduce funding accross
the board for all our department we will have to cut the Sheriff’s budget by
$40M. This would greatly hamper the safety of our citizens in Polk County.
Similar cuts in other departments will destroy the quality of life in Polk
County, we are all working so hard to improve. The bottom line is we will
be endangering the well being of our citizens in Polk County so residents
living in Broward, Dade, and Palm Beach County can live in multi-million
dollar beach homes and not have to pay any property taxes. Furthermore, we.
we will be abdicating local control over our destiny and taxes. The power
to tax will be dictated by a body politic far removed from Polk County and
dominated by the more populous southern counties.
Proporty taxes can be quite tricky.
My feeling is that proporty taxes should not change much until the next buyer comes along.
I have witnessed( in Hawaii) how local old families with little means were being evicted over proporty taxes raised exponentially because some Japanese investers built a huge tourist entertainement establishment at the entrance to their valley . Suddenly all the properties there up the valley take on an estimated value of huge proportion. The old family homestead now becomes unaffordable and the family up the valley is evicted because the equation has changed and they can not afford to stay on their homestead any more.That was not in the contract when they occupied their homestead many decades ago.Is that desirable? Do those families have to be victims of someone elses investment? I think that taxes should be raised only after the homestead is sold at a profit.
So the sales tax sounds better.
Those who have a lot of expenses because they are well to do will pay their part and I think that makes the deal socially acceptable.
I am all for lowering property taxes and increasing sales tax! As a Realtor, I know that rising property taxes, insurance, etc. are pushing many people out of the market for purchasing a home. Anything that can be done to reduce the cost of a home will improve our housing market which will help our area continue to grow at a steady rate.
The only downside to raising sales tax will put some pressure on big spenders and renters… The big spenders will likely be o.k. And as far as the lower income people affected: I think that we should offer personal finance classes.
This really sounds like a good idea because as it presently stands, the average-income citizen is either going to purchase homeowner’s insurance or pay their taxes, and neither can be ignored.
I think, however, that there needs to be a formula in place for lost money from exempting homesteads to be replaced by the increased sales tax collections which would be redistributed to local governments, before a the language for a vote can even be constructed.
As a homeowner, this solution sounds terrific, but as always, a careful examination of the (inevitable) fine print is strongly advised.
People are forgetting that property taxes are DEDUCTIBLE ON YOUR FEDERAL TAXES, sales taxes (after this year, anyway) ARE NOT. So unless they change that those of us with NO property tax will be screwed on our federal return. Oh, and to Jon–just where are your kids going to go to school if there are no taxes on your home? Do you really think the jokers in Tallahassee give a darn about the schools? If they did this would not have made it out of committee. The whole reason that property taxes went up in the first place is because businesses are now paying NO taxes, thanks to Jeb!, and the burden shifted to us. Sorry that you Johnny-come-latelys are paying more than someone that’s been here 10 years, but next time perhaps you should plan ahead.
As a point of clarification to JB:
According to current estimates, for every $100 paid in residential taxes on homes of $200,000 or less, it is estimated that the cost of delivering services to that residence is between $126 and $178.
By comparison, for every $100 paid in commercial (business) taxes the cost of delivering service is estimated at $18.
Commercial(business) taxes subsidize the shortfall in residential tax collections.
To state that businesses pay NO taxes has no basis in fact.
I say leave it like it is. Reduce spending and drop the taxes. The majority must like higher taxes……looked at the county commissioners. Only one opposed the hike, and the Ledger makes him look like a nut. Randy is probably the only sane one on the commission. The majority also voted to drastically reduce class size, did you think that wouldn’t cost ? What about the rail the majority voted in…..Bush had the common sense to oppose that and put it up for a re-vote.
I saw this in some realtor news I get and it got me thinking.
“Start your engines: Florida legislators open their annual session tomorrow with a new slate of leaders and a new worry: Can they restart the state’s decade-long economic boom by peeling back property taxes? A solution must receive a “yes†vote from three-fourths of each chamber’s members on the complex plan, followed by a special election in which 66 percent of voters approve it”
I would love to see the housing sales continue as well as growth in the area. However, lack of control over our funds locally puts us at a disadvantage. And I am left wondering- has this sort of tax program been implemented elsewhere? What has the outcome been? Is there anything we can do to have more control of our funds or generate new funds after a implementing this tax change?
I appreciate this forum and feel that it can be a useful tool to gauge the opinions and attitudes of our local citizenry on various topics. However, I think that it should be monitored to eliminate posts that personally attack other posters on his site, as was done in a recent post. I think if you cannot make your opinion known in an intelligent and even-handed manner without calling out earlier posters or stooping to name calling…then your opinion is irrelevant and not worthy of this site.
I completely agree with George Long, while we do not want to inhibit free speech and the flow of thoughts, personal attacks need to be weeded out. This Blog is one of the best features that the Chamber has added in years! Thanks Bob!
If this would come to pass, would ALL the tax money go to Tallahassee to be redistributed? Haven’t we seen that when local control is lost and more hands are in the pot, less of our money comes back to the local area? There will another cabinet post andother office and another layer or two or three of bureaucracy. Think about it.
Yes I support the tax increase and doing away with property tax. 89 million visitors to Florida last, 35 million in Orlando alone. Everyone wants to make is sound as if the Rich and elite are getting away with something and the poor are getting stuck again. Hog wash! Remember, all ther groceries that you buy, the consumables, are not taxed so there is no increase. Yes if you smoke, and drink alcohol you will pay more, but please remember this, the wealthy pay more simply because they Spend more. Lets look at something, if you spend 10,000.00 a year in taxable products in Polk county you now pay 700.00 in sales tax. With the 2.5% increase you would pay 950.00. Now if you have a yearly propery tax bill of 1200.00 that leaves 950.00 that still has to be paid (the increase was 250.00) So now you would have to spend an ADDITIONAL 10,000.00 at the new tax rate of 9.5% to make up the difference of 950.00. People, start doing the math and look at this and stop listening to all the local officials and others who say this would hurt us. Remember 89 million tourist to Florida alone last year which means if those 89 million spent just 100.00 in one day and paid the 9.5% sales tax for that one day alone it would create roughly $845 million. Out of that $223 million would be for the property tax……Think about, that’s just ONE day.
Remember, that you have to be a Florida Resident to take advantage of this new proposed tax. All the winter residents, people who own vacation homes here but are residents of other States would still have to pay the regular property taxes. Remeber also that not everyone buys a new refrigerator every year or a new car. And just like buying a new car there will be limits in place for the increase when making a purchase like a car, just like there is on the 1% sales tax that Polk has, only the first 5,000.00 of the car is taxed. (I believe my number is correct, but could have changed since I bought my last car in 2004)
Reggie may have changed my position on this tax issue. What he says makes a lot of sense.