A Times Editorial

Do the math

Most families would save money under the Senate president's tax reform plan, but the broadcasters and business lobbyists don't want you to know that.

© St. Petersburg Times
published January 9, 2002

Let's do some simple household tax math. Spend $100 at the mall and pay $6 to the state in sales tax. Buy a $5,000 used car and pay $300 in tax. Eat a $10 meal for two at McDonald's and pay 60 cents.

Now what would happen if the state suddenly cut its 6 percent sales tax to 4 percent? (Some counties charge an additional 1 percent.) Answer: You would save $2 at the mall, $100 at the car lot, and 20 cents at McDonald's.

This, consumers, is what the Florida Association of Broadcasters calls a tax increase. Lest you be confused by the hyperbolic political advertising you are about to see on televisions across Florida, please understand the missing fine print. The tax reform plan that is under assault, a plan proposed by Senate President John McKay, R-Bradenton, is one that would cut tax rates for most families by removing the tax breaks for many businesses. In the case of broadcasters, their fear is that the state would finally tax advertising. (The Times and other newspapers also would be affected if the exemption for advertising was removed, but fair is fair.)

Note those who are lining up to oppose McKay, who is asking only that voters get the chance to decide the issue. A recent strategy session at the Governor's Club in Tallahassee attracted such political operatives as: J.M. "Mac" Stipanovich, an attorney who lobbies for U.S. Sugar Corp.; Randy Miller of Associated Industries of Florida; insurance lobbyist Paul Sanford; Pat Roberts of the Florida Association of Broadcasters; Mike Fields of Bank of America; Rick McAllister of the Florida Retail Federation; Gene Adams of the Florida Association of Realtors; Lance Lozano of the Florida United Business Association; and Lloyd "Buddy" Turman of the Florida Institute of Certified Public Accountants.

At stake for them is the free ride they enjoy under the current tax system. Next year, Florida will collect $17-billion in sales tax but will exempt $23-billion. McKay proposes to tax some of the services, such as the fees for attorneys and accountants, that should be taxed like the rest. In return, the existing sales tax would be slashed by 33 percent.

It is true that, under McKay's plan, people who use lawyers or accountants will pay a tax they have previously avoided. But the state will not collect any more taxes overall, which means that most people will end up paying less. An analysis by Orlando economist Henry Fishkind projects the average household would save $133 in the first year.

The business lobbyists are hitting the air waves now because the Legislature is about to begin its annual session and McKay has made tax reform a top priority. The lobbyists want to put the pressure on lawmakers to try to stop McKay from getting his plan on the ballot for voters to consider. At that point, the lobbyists know, the commercials might do little good. After all, most consumers can do the math for themselves.

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