Latest tax plan makes a bad situation worse

By A TIMES EDITORIAL
Published October 14, 2007

Once again, Gov. Charlie Crist and the Florida Legislature are gripped by tax-cut fever. Once again, they are poised to embrace a quick fix to a difficult problem without regard to long-term consequences.

Let's recap: In January, legislators approved a property insurance fix that left the state financially vulnerable and has not significantly reduced premiums. In June, they approved a constitutional amendment on property taxes that no one loved and was so poorly worded a judge threw it off the ballot. Now they plan to approve another tax-cut amendment this week that includes Crist's simplistic campaign pledges they previously rejected.

If the governor and the Legislature don't have the vision or the courage to create a fairer property tax system, they should leave the job to the Taxation and Budget Reform Commission that is meeting now and has the power to put amendments on the ballot in November 2008. Instead, they are determined to make a bad situation worse. Their constitutional amendment to double the $25,000 homestead exemption and allow homeowners to take a Save Our Homes tax break of up to $1-million with them when they move would extend and exacerbate the unfairness of the current system. It would require further cuts in services by cities and counties already grappling with newly required tax rate rollbacks and revenue caps, and it would not provide significant relief to businesses and other nonhomesteaded property.

This amendment has none of the benefits of the now-abandoned super homestead amendment, which eventually would have phased out Save Our Homes and put all homesteaded property owners on equal footing. It has none of the thoughtfulness behind a plan the Senate approved earlier this year, which would have allowed homeowners to take a smaller Save Our Homes tax break with them to be phased out over time. It does protect public education from losing property tax money, but even the way it accomplishes that will confuse voters.

The additional $25,000 homestead exemption and the Save Our Homes portability would not apply to school property taxes, which represent about 40 percent of the overall property tax bill. So the savings are not going to be nearly what voters might expect. A better way to protect schools would have been to raise state revenue to offset straight-forward tax cuts, but that would have required forward-thinking.

There are some positive elements to the latest tax-cut package. There are breaks for first-time homeowners (although how that will be policed isn't entirely clear) and low-income seniors. The proposed $25,000 exemption on tangible personal property remains, and the playing field is leveled for taxpayers questioning the assessed value determined by property appraisers.

But those positives are far outweighed by the new amendment's drawbacks, particularly the overly generous portable Save Our Homes tax break. Real estate agents undoubtedly love it, but the end result would be even more unfairness in an unfair tax system. Long-time homeowners who have the largest Save Our Tax breaks now would keep them when they move, more recent home buyers would never catch up and similar homes on the same street always would be taxed differently, even after they changed hands.

There are better ways to provide tax relief and make the system fairer. The state could close sales tax loopholes and use the money to reduce school property taxes. A reasonable limit could be placed on increases in value on nonhomesteaded property that is not protected by Save Our Homes. The assessment of commercial property could be based on current use, not highest and best use.

Don't hold your breath. Legislative leaders have limited the scope of this week's special session to make it next to impossible for anything to be considered except what already is in the script. That makes it easier to avoid a real debate about tax reform and approve a flawed amendment that is all desert and no vegetables.

[Last modified October 13, 2007, 20:57:13]