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Pondering our corrupt tax code

By MARTIN DYCKMAN
Published March 13, 2005

TALLAHASSEE - Let us suppose that Florida taxed the purchase of a Corolla but not a Lexus, or a six-pack of beer but not a magnum of Dom Perignon.

Unfair, you say? Yes. Implausible? No.

Although those examples are imaginary, Florida's tax laws reek of some real ones that are no less perverted.

Sales tax is collected on general admissions to college football stadiums but not on the rent that corporate sponsors and wealthy boosters pay for their skyboxes. The booze also flows freely up there, while anyone drinking in the cheaper seats is liable to arrest.

A ticket for a public fishing boat or pier is taxed. Private boat charters are tax-free.

Put your life savings into your home - which for many people is the extent of their wealth - and you will pay an ever-increasing tax on it. Every year, the governor and Legislature plug the increased revenue from rising assessments into the school finance formula.

Some of these politicians will tell you that this is not a tax increase because they are not raising the rate. That is a lie. If you're paying more on the same house, how is it not a tax increase?

The Legislature was once in the habit of reducing the rate each year to compensate for assessment increases, but that stopped after Jeb Bush needed the money for other purposes, such as cutting the intangibles tax.

Speaking of the intangibles tax, it was with splendid but surely unconscious irony that the governor last week proposed to spend some of the temporary budget surplus on doing away with what's left of that tax right now. In the same announcement, he also agreed to renew the Medically Needy program. A reprieve for the poor to balance a tax cut for the rich.

That wasn't quite as tone-deaf as it sounded. Bush finally saw how bad it looked when his original budget proposed to eliminate half the tax and most of the Medically Needy program. It meant that poor people would die while the rich got richer.

Only prosperous people still pay the intangibles tax. The "seniors and savers," as that tiresome mantra puts it, were spared several years ago when the rates were cut and the exemptions were increased to $250,000 for an individual taxpayer and $500,000 for a couple.

Who's left? According to the Department of Revenue, the average individual taxpayer who is subject to the intangibles tax reported $1.2-million in taxable holdings last year. The average couple reported $2-million in taxable assets, on which the supposedly "insidious, invidious" tax cost them the enormous sum of $2,000. Oh, the poor, suffering darlings. You probably paid more tax on your house. I know that I did on mine.

It bears remembering that cash in banks isn't subject to the intangibles tax. Neither are IRAs, 401(k) plans and other qualified retirement accounts. The tax applies primarily to stocks and bonds in conventional portfolios. Perhaps that's too arbitrary, but so are the rest of Florida's tax laws.

Eliminating the intangibles tax will cost an estimated $260-million, which is about the same as it would take to make something decent out of the prekindergarten disaster plan. Fortunately, there is some adult leadership in Tallahassee. Senate President Tom Lee said tax cutting should be deferred until the budget debate. He has his eye on a $1.2-billion projected deficit for the fiscal year 2007-08. The intangibles tax, he conceded, now "applies only to very wealthy Floridians."

But even Lee felt that he had to pay lip service to Republican orthodoxy on the intangibles tax.

"I've always thought that it's bad tax policy to tax savings," he said. The next few minutes found him struggling to explain why it is good tax policy to tax what people choose to save in real estate but bad tax policy to tax what they save in stocks and bonds.

That's not to say that the common people might not get some symbolic justice this year. Sen. Bill Posey, R-Rockledge, has reintroduced his bill to repeal the stadium skybox exemption. Rep. Dan Gelber, D-Miami Beach, is sponsoring it in the House, where the change in speakers improves the chances from zero last year to maybe one in 100 this year.

"I thought the first time I did that and ostrich feed it would be a slam dunk, but Johnnie Byrd just saw that that stuff went nowhere," Posey said.

To put matters in perspective, however, the corporations and wealthy boosters would pay maybe $800,000 a year if the skyboxes were taxed. The same upper classes save $43.4-million from the charter fishing boat exemption. No legislation has been proposed to repeal that.

Martin Dyckman's e-mail address is dyckman@sptimes.com

[Last modified March 13, 2005, 00:23:15]