An unfair tax burden
In his inaugural address four years ago, Gov. Jeb Bush complained about the "crushing weight" of Florida taxes. He has prided himself on cutting taxes every session since then.
But for most Floridians, the state and local tax burden has become heavier still. It has been lightened only for the wealthiest, who were taxed the least to begin with.
The poorest fifth of Florida's working families now pay 14.4 percent of their income in state and local taxes, more than five times the rate at which the wealthiest pay. You'd have to go to Washington, at the farthest corner of the continental 48, to find a state that taxes more unfairly. The wealthiest Floridians -- the 1 percent earning $289,000 or more -- pay a scant 2.7 percent. Only five other states, all of them small, tax their wealthiest people any less.
This disgraceful comparison is detailed in the 2003 edition of Who Pays?, a national analysis of the burdens on all nonelderly taxpayers published last week by Citizens for Tax Justice, a Washington-based public interest group. Since the first edition, seven years ago, Florida has worsened in nearly every respect.
Regressive taxation, defined as requiring greater effort from the poor than from the rich, characterizes all but eight states. Florida's slant, however, is particularly extreme. Even middle-income families pay at an effective rate nearly three times as high as the wealthiest do.
The root of this evil is Florida's heavy dependence on the sales tax, which has not been reduced -- except for several token sales tax "holidays" -- by any of the governor's tax-cut programs. To the contrary, Bush has looked to reducing (and eventually eliminating) the intangibles tax, levied primarily on stocks and bonds, which is the state's only tax on wealth. This strategy does nothing for the poor and little for the middle class but is a great favor indeed for those whose savings amount to six or seven figures. Moreover, his budgets have shifted a greater share of school financing to local property taxes. This is a particular burden on tenants, because rental property cannot be homestead-exempt.
Thus the worsening picture. Since 1989, according to the study, the effective burden of Florida state and local taxes has increased for everyone except the wealthiest 20 percent. Who Pays? points critically at the intangible-tax cuts:
". . . Cumulative tax changes over the decade only worsen Florida's status as one of the most regressive states.
". . . The bottom line is that many so-called 'low tax' states are high-tax states for the poor, and most of them do not offer a good deal to middle-income families either. Only the wealthy in such states pay relatively little."
The study comes too late, alas, to have become an issue in the recent election or to have illuminated the debate over former Senate President John McKay's valiant but forlorn attempt last session to reform the sales tax by eliminating exemptions and reducing the rate. However, it is most unlikely that any amount of new truth would have made a difference. The old realities were ugly enough, and still the governor and the House insisted on cutting taxes no matter the consequences to education and health care. With the baleful help of a large budget deficit, McKay and the Senate did succeed in forcing a postponement of yet another round of intangible tax cuts. It came with a promise to resume cutting this year. Will the governor propose to renew them? Will legislators oblige? Will Florida displace Washington as the most unfair state of them all?
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