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The statistics rain on the governor's tax parade
© St. Petersburg Times TALLAHASSEE -- As he brought out his bad-news budget Tuesday, Gov. Jeb Bush meant to put a happy face on it. As tough as things might seem, he said of the spending cuts, "I want to remind you it could be a lot worse." As for taxes, he still wants less of them too. He made a big point of noting how the average state tax burden on Floridians has dropped from 6.44 percent of personal income in his first year to 6.06 percent now. The trouble with that Panglossian analysis is that it refers strictly to state taxes and to averages. As Paul Krugman of the New York Times had written just that morning, the "average" person in a bar becomes a billionaire when Bill Gates walks in the door. However, only Gates would actually be rich. To combine Florida's state and local taxes and break down the impact by income groups is to discover that only the rich have gotten a tax break during the Bush years. State and local taxes are inseparable in this regard because state policies influence most local taxation, from school millage rates to sheriffs' salaries to pension fund contributions. County commissions may have to raise taxes by $64-million next year just to pay for the juvenile detention costs that Bush wrote out of the state budget. He is also putting pressure on holdout counties to adopt local-option school taxes. The statistics that rain on the governor's parade come from the Institute on Taxation and Economic Policy (ITEP), which is an affiliate of the nonprofit Citizens for Tax Justice, which is one of Washington's most liberal voices. Bush considers it the left-wing equivalent of the libertarian, antitax Cato Institute, which happens to be one of his favorite sources. But if critics fault its instincts, they rarely challenge its math. What the math shows, in a nationwide study the organization released earlier this month, is that for all Florida families except the 20 percent who are wealthiest, the net effective burden of state and local taxes increased from 1989 to 2002. (The calculations take into account only nonelderly families. The figures quoted here account for federal tax deductions.) The tax burden on the poorest fifth of the population, those earning less than $15,000, went up by 1.3 percent of their income. It increased 0.9 percent for the next tier (those averaging $19,200 a year); .8 percent for the next group (Florida's true statistical middle class, with incomes averaging $30,000) and .6 percent for the upper middle class who average $49,600 a year. Among the wealthiest 20 percent, however, everyone realized a slight tax cut of .1 or .2 percent of income except those at the very top -- the one family out of a hundred -- who came out even. All that might not seem like much, except the result was to worsen what was already one of the most unfair structures in the nation. Florida is a low-tax state only for the rich and upper middle class. For the six out of 10 who aren't in those groups, Florida's taxes are among the highest, and the less you earn, the larger the share for state and local taxes. The poorest pay 14.4 percent, five times the 2.7 percent that's asked of the millionaire. Only the state of Washington is worse. Only for incomes averaging $49,000 and up are Florida's tax rates lower than most states and the national average. At the very top, Florida is cheaper than all but Wyoming, Nevada, New Hampshire, Colorado, South Dakota and Alaska. Florida is far from the only state with a regressive tax structure. According to the study, merely eight states tax the rich as much as the poor. Florida is extreme, however, because for lack of an income tax it relies too heavily on sales and excise taxes that fall disproportionately on people who have to spend their money about as fast as they earn it. Meanwhile, Bush and the Legislature have been cutting the only recurring tax on saved wealth: the levy on stocks, bonds and other "intangibles," and federal tax changes are stripping Florida of its ability to tax estates. The governor blames CTJ's conclusions on property taxes, which he says have "gone up dramatically because of the booming market." Rising values do, in fact, generate more taxes unless rates are lowered to correspond. By requiring the same local "required effort" for schools, the state is conveniently helping itself to a tax increase, though no one in Tallahassee cares to call it that. Bush wants no straightforward tax increases this year, though he says that "all bets are off" next year. First, he wants to shrink the government some more. The Senate isn't going along; its appropriations committee has painted a huge bull's eye on Bush's budget by planning public hearings at which it expects (and hopes) to collect bushels of criticism. One object will be to make a case for some of the tax reforms that John McKay, the departing president, tried to get last year. The secret subplot in all this is whether to set the stage for an emergency increase next year in the sales tax rate on the present base, or whether to make another run at some of those sacred cows. The first alternative would make the system even more regressive, but it would please the lobbies. Figure the odds.
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