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Maybe Rubio needs economics class

By STEVE BOUSQUET
Published March 3, 2007


You really have to wonder sometimes about people who call up radio talk shows.

Chances are that "Shirley from Akron" or "Al from Spring Hill" are more interested in hearing themselves talk than making sense.

Which brings us to Marco Rubio.

The speaker of the Florida House called a popular morning show in Miami last Monday to tout the House plan to wipe out property taxes on owner-occupied homes and replace the lost money with a 2.5-cent sales tax increase.

One of the many criticisms of the Rubio plan is that the sales tax in Florida is already too regressive.

Even though the tax exempts household necessities such as food, medicine and household rent, is also exempts billions of dollars in services used mainly by wealthier people.

The result is that low- and moderate-income people spend more of their money on goods subject to sales tax than rich people do.

"On top of gaming," Rubio told Jim DeFede on WINZ, "there is no more regressive tax than the property tax because it in no way reflects your income."

Rubio explained that a person who loses his job will pay less sales tax and federal income tax, but would still be stuck with that property tax bill.

"Your property tax bears no resemblance whatsoever to your ability to pay it," Rubio said. "No one's talking about how regressive the property tax is."

"What's he smoking?" asked Jim Smith, the Pinellas County property appraiser, after hearing about Rubio's comments. "The most regressive tax is the sales tax, by far."

Smith, a Republican, says the wild fluctuations in the revenue generated by a sales tax make it a risky move to increase the state's dependence on it.

"If you're banking on the sales tax, hang on, baby, because you're in for a ride," Smith said.

Smith's not alone.

Orlando economist Hank Fishkind said Rubio's analysis would be right if all low-income people owned homes, and thus would benefit from the property tax break.

"The reality is, most low income people are not property owners," Fishkind said. "That's where the potential disconnect is."

Two major business groups, the Florida Retail Federation and Associated Industries of Florida, also say the sales tax is highly regressive - because it hits those who can least afford it the hardest.

Living property tax-free sounds wonderful. The tradeoff is a sales tax that would, in some counties, hit double digits for the first time.

The current sales tax ranges from 6 percent to 7.5 percent in some counties that have taken full advantage of local option taxes for schools, roads, health care and other programs.

Those highest-taxed residents are in Escambia, Jackson, Leon, Madison and Monroe counties.

Talkmeister DeFede asked Rubio about Florida having the highest sales tax in the country.

"You can't look at it that way," Rubio said. "You can't just focus on one tax. You've got to look at the overall tax burden, and we'll have the lowest or certainly among the lowest overall tax burden in the country."

Debate over Florida's tax system, like the flow of tax revenue itself, is cyclical - it comes and goes.

The last time Florida got this worked up over the tax structure was five years ago. Then-Senate President John McKay tried to make the sales tax fairer by lowering it to 4.5 percent and eliminating exemptions for stadium sky boxes, legal services, accounting and the rest, more than $20-billion in all.

It didn't happen. One of the leaders of the opposition was Rep. Marco Rubio.

Steve Bousquet can be reached at bousquet@sptimes.com or 850 224-7263.