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A Times Editorial
In the face of a $1.3-billion budget deficit, the state Senate and House have agreed to give up pay raises, however, the House won't seem to let the large intangibles tax cut go.
© St. Petersburg Times, published October 30, 2001
Florida legislators left Tallahassee six months ago with an optimistically balanced budget bearing a small pay raise for themselves and a large intangibles tax cut spread thinly among several hundred thousand taxpayers. On returning last week to confront a projected $1.3-billion deficit, both houses voted to give up their $708 raises as a token but symbolic down payment on the larger cuts that will cost many jobs and severely limit Medicaid benefits. The tax cut should be repealed, too, or at least deferred, as Gov. Jeb Bush is urging. But only the Senate is willing. To protect that special constituency, House Republican leaders intend to pass the Senate budget without some other bills that are needed to balance it. Then they would declare victory and go home.
The House strategy is as irresponsible as it is brash. If the tax cut was a promise, so was everything they said last spring about caring about decent health care and schooling for the multitudes of Floridians who aren't fortunate enough to own stocks and bonds. Florida can't spare the estimated $128-million in revenue that's at stake in the intangibles tax dispute.
The people of Florida should understand, however, that it's not necessarily about "seniors and savers," as the propaganda from Tallahassee ceaselessly trumpets. Here are the facts:
Most ordinary savings are entirely exempt. This category includes all money, such as bank deposits, CDs and annuities, and all federally qualified retirement plans such as IRA and 401k accounts. U.S. government bonds are exempt also, along with all bonds, notes and debts of the state of Florida and its counties, cities and taxing districts; all mortgages secured by real estate; all business accounts-receivable; and several other categories of specialized investments. For the average investor, that leaves only corporate stocks, bonds and non-Florida state or municipal bonds subject to the tax.
But even for those who do owe it, the rate is low -- $1 per each $1,000 in value, and the exemptions are generous. The exemption for an individual is $20,000; for a couple filing jointly it is $40,000, and if after that the tax bill is less than $60, the state forgives it because it costs that much to process a return and a paper check. A couple, then, could own as much as $99,000 in stocks and bonds, along with a real fortune in retirement funds, checking accounts, savings accounts and certificates of deposit, and owe the state no tax.
The rates used to be higher. In pursuit of a goal to repeal the tax in stages, Bush and the Legislature chipped away at it in 1999 and 2000. This year, fearing an economic downturn, Senate President John McKay didn't want to cut any more, but the House forced a compromise that would eliminate more than 430,000 tax bills unless this decision is repealed or deferred before returns are due in January.
The exemptions would be increased to $250,000 for individuals and $500,000 for couples. Additionally, there would be a new, $250,000 exemption for businesses, which would remove an estimated 96,392 from the rolls altogether. The Department of Revenue now calculates that roughly 144,167 individuals and 191,27 couples would be newly exempt as well.
Many no doubt would regret and some might resent any legislation to postpone or defer this windfall. But few if any would trade places with the adult Medicaid recipient who will soon lose his dental care or the woman in a minimum-wage job for whom there will be no more prenatal care or the adult and juvenile caseworkers whose crime-prevention jobs are about to be sacrificed. Are Florida's "seniors and savers" -- as the mantra defines them -- as self-centered as some legislators evidently presume them to be? We don't think so.
For the record, postponing the tax cut would cost no individual taxpayer or business more than $210, and no couple more than $460, and of course they'd have to be fairly prosperous to owe even that much.
Meanwhile, the Senate and House have passed different bills to forgo their pay raise. For the House to carry out its threat to adjourn abruptly today would probably mean that neither bill becomes law. In that event, they'd be able to keep the pay raise and claim that they had voted not to. Could that be the endgame? Perish the thought.