The Readers: Here's How To Fix This Tax Thing

There are quite a few e-mails on Sunday's column on the state House's plan for eliminating most property taxes on homestead property, and raising the state's sales tax to 8.5 percent (plus whatever each county tacks on).

From Louise McArdle of Seminole: I am a snowbird and live in Florida for 5.9 months.  I own my own condo and pay a full year's taxes on it and also insurance. Why can't I be considered to save on taxes?

Jim & Lillian Conner, who split their time between here and Canada, prefer the setup there of a 15-percent sales tax on just about everything.

John Borrows of Indian Shores has an idea I haven't heard before: deferring any property taxes above the cap until the time a property is sold; he has run lots of numbers and thinks it works out over time. (Of course, the local governments like predictable, recurring annual revenue.)

What else? Taxes should be based only on the ability to pay -- in other words, not property, but income. Another suggestion is to exempt a HUGE amount of a property's value -- $500,000 for residential and business property, $200,000 for rental -- so that the fattest cats would still pay something, and still raise the sales tax.

Lots of ideas... but easier said that done; the challenge is building support in the Legislature to do it...

Comments

[Winston]

Florida is such a diverse state in population diversity, that I do not feel that only a raise in sales tax would be fair.

Can you imagine the disparity between Pinellas or Palm Beach County vs Dixie?

On the other hand, sales tax is probably the fairest, The size of the toys matters, once basic needs of life are excluded. It's really hard to pin those down, though. Currently Washing Powder is taxed at the grocery, but Dry Cleaning gets a pass. (Who uses dry cleaning, and who uses detergent?)

The tax cap is totally unfair, but so is homestead exemption. Property tax is a must, as it is also, like sales tax something all pay. Homestead is unfair, in that tourists and winter visitors (real injections to the economy) cannot partake of the benefits. Neither can renters. On the other hand, how much need for added roads, water, power plants would be needed without them. Yes, they need to pay a fair share.

My Solutions: (drum roll here!)
1. Raise the Sales Tax, but look carefully at any exemptions. Keep, and/or expand to a tax on services.

2. Eliminate both the tax cap, and Homestead Exemption. Create a realistic assesment of all property values, even including best use. Many investment properties are being held in the Agricultural exception with just 2 or 3 cows per acre, by out of staters, expecting a huge return at a future date. Meanwhile, taxes are nearly nothing.

3. Somehow, the less populous counties must be protected. They too, need police, fire protection, and SCHOOLS. Property tax is the driving force for public schools. Rural areas need to be protected. Perhaps (shudder) a State Income Tax? Not the farce that the corporate tax has become.

[Jane]

I know this is a very unpopular opinion, but the only real solution to FL's tax problem is to cap local property taxes severely (or do away with them as proposed) and start collecting a state income tax. The sales tax is a regressive tax and raising it will only shift more of the burden to those already struggling who can ill afford it. Neither should property owners, homesteaded or otherwise, shoulder the cost of every state and local service. We are already breaking under the costs of our insurance with no break in sight despite the crowing coming out of Tallahassee.
With a fair income tax, the least well off will pay little, or nothing. Those able to afford it will pay more. Fat cats might at last get to pay their fair share. But fear not, millionaires! State income taxes are deductible on your Federal return.

[Senor]

I say get rid of the property tax. It makes me so mad when I get my bill and I see how much is going to the public school system. If my money goes out as a sales tax it just feels better because I'm just not sure exactly where my money is being wasted.

[Ron]

Personally, I don't feel that the proposed increse in sales tax would be detrimental.

If you think of the increase in dollars, it is $25 per thousand (possibly $35 in Pinellas) on a retail level.

A homeowner with a $3,000 tax bill would then have an additional $250 per month in disposable income.

Given the American propensity to spend rather than save, this "additional income" would make its way into the economy via the purchase of tangible goods instead of paying property taxes and could increase retail sales.

A benefit might also be seen in the housing market by eliminating the "catch up" of property taxes when a home is sold and enable more people to qualify for a mortgage by reducing the property tax portion of the payment used for qualification.

True, the property tax deduction would be lost but the increase in tax liability (or decrease in a refund) would not be equal to the amount of money saved.

Seems like a win, win situation for a majority of Florida homeowners.

[robert c wiliams]

How about tightening the loopholes in the corporate income tax and putting teeth into enforcement. I remember that Sydney Freedberg did a series in the Times that demonstrated how those with most ability to pay are allowed to pay the least.Has anyone in the legislature looked at this as a solution?

[SWLiP]

Taxes should be based only on the ability to pay -- in other words, not property, but income.

But an income tax only affects people who are making an income; i.e., working families. It does not tax idle wealth.

A tax on consumption (i.e., sales or VAT tax) is much more equitable because those who consume more pay more tax.

[SWLiP]

I guess this comment thread doesn't accept italics tags. The first sentence in my previous comment is a quote from Howard's post, not my words.

[d.r. vance]

regading real estate taxes and a prop0sal from mr.rubio.
the state of michigan came up with a similar scheme and the voters passed it. the politicians made a very convincig case and swayed everyone into raising the state sales tax in excange for lowering the porpety taxes. it overwhelmingy passed and property taxes were indeed lowered.

however, within a few years, the property taxes were again raised to more than what they were before. this all took place in the 90's.

this plan of mr. rubios' would cancel homestead tax protection when his plan fails in a couple of years after approval. should the tax payers approve it., then the real
estate taxes can be re-evaluated after the plan fails.

one more thing. the sales tax was not reduced.

[Daniel Esposito]

Do not raise the sales tax! Really bad idea. Reset home evaluations to 2001 levels, then lower the millage rates. Increase the homestead to 40K and let small business recieve some sort of exemption, maybe 25K. You can give relief to snowbirds by limiting property tax increases to the rate of inflation, say 3%. You won't need "save our homes" if you limit tax increases statewide to 3% yearly. You should not eliminate property tax, just make it fair. A higher sales tax or a state income tax is constrictive to the economy, BAD IDEA.

[Bob McAinsh]

We all know the Property Tax in Florida is highly skewed. My suggestion for a fair and workable way to operate the Tax is three-fold: a Spending Cap, Equal Property Taxes and Relief through Discounts to the Occupants. Allow people to move without penalty and don't penalise the tourist, second home owner, small commercial owner or the renter with an unfair tax burden. Plus, the suggestion of a higher sales tax will do untold harm to the Florida economy.

The proposed scheme is:

1) Cap spending by the counties and cities - roll back to 2001/2 levels of spending.

2) Tax ALL property based on its assessed value - house, condo, commercial, etc. This means all similar properties in a street or in a condo will have a similar tax burden. Apply Save Our Homes cap at 5% to ALL properties. Nominal Tax due = Assessed Value * Millage.

3) Provide discounts to the occupiers based on age, number of occupants, use, etc. Actual Tax due = Nominal tax due - % Discount.

Here are some suggested discounts but they could be varied or added to:

Single occupancy -25%;
Age over 65 - 50%;
Empty, unfurnished property -50%,
For every 3 years occupancy - 1% (replaces Homestead Exemption);
More than 2 adults + 5% (uses more resources).

Initially this scheme would mean some large differences between what someone pays in tax now against what they would pay under the new scheme. We could provide a taper relief for the change-over of say 5 years for an increase and 3 years for a decrease.

This should prove to be the most flexible way to change from the present unfair system to one that most people should feel comfortable with. It also means people are free to move when they want and carry their discounts with them - what a boost to the housing market! Renters and second property owners would also benefit from lower taxes making the rental market more affordable and bring the tourists back. Even Grandma in her big house would be shielded from too large an increase!

Please think how this scheme would work for you and I'm sure you'll agree that it would make the system a lot fairer.

[Free Agent Voter]

Howard-

I'm hoping someone (you) will start a discussion that, instead of reacting to the tax plan du jour, backs up to see if we as a community can more or less agree to the common values we want in a tax system. Let me throw out the ones that get my vote:

1) Sufficient - the system we want should bring in enough in revenue to pay for what we need, and be pretty protected from economic vicissitudes.

Note that this isn't about whether the revenue is being spent wisely. That's not the fault of the tax structure, that's the fault of the people who approve the budget.

2) Fair. OK, OK, that's way too broad a term. How about:
-universal - everyone should contribute
-proportional - let's forget for a moment who it was that said "from each according to his ability."

3) I don't have a good word for this - compassionate, maybe, but basically, people shouldn't be driven out of the state by taxes. This was the initial impetus behind save our homes - don't force grandma to sell the house because her property taxes go up faster than her Social Security COLA. And I would argue that that is a value that we want to keep, even if we find a more precise mechanism to apply it.

Maybe these are the wrong values; let's talk about it. But once we settle on some values, then it becomes pretty easy to evaluate tax structures based on how they compare to our values. Otherwise, we're going to keep bumping along, over-correcting to the last mistake and driving the car while facing out the back window, rather than really looking ahead.

[Jim]

Pinellas County Government is by far the greediest of all the counties I have lived in my entire lifetime and there have been a few. Think about it 500 million in 2 years more in taxation, now on top of that a 10 year penny tax for billions more. We all must wonder what contracting friends will get much of the money.

What is amazing is that the county brags about a less than .5% cut on the millage when they should have released a 20% cut on the millage rate to be fair to those in this county. Notice the new vehicles, outrageously priced courthouse mod, buying up marinas for millions of dollars that others are paying for already whom are using it (vs those that don't paying the tax) and on and on and on.

They would not toss that money away if it was their checking account the way they do here in this county. Even Charlie Crist would agree these government officials here in Pinellas are money hungry and could not "give a s" about the citizens here.

[Len Lee]

I never thought sales tax would be considered regressive. In certain situations such as the $5K cap it can be considered unfair & biased. Personally I am for a "consumption" tax on the national, state & local level. To be a truly fair tax it needs to tax everything & everybody must pay. No exemptions for any product or service & no exemptions for any person, business, institution or entity. It would generate an unbelievable amount of revenue would eliminate agencies such as the IRS and reduce the amount of paperwork immeasurably. This idea makes so much sense it is no wonder governing bodies run from it frantically.

[Piper]

Bob M's comments from March 2 deserve a look.

We need to revisit the homestead system.

How come it took so long for the issue of rising revenues for the cities to get political attention?

Because HOMESTEADERS VOTE and they are not gored by rising property values. They see the flowers in the planters along the city streets, the improving emergency services etc. etc. (Yes even the art installations) and think all is well.

Revenue caps are a good idea to provide some substitute for the vigilance of voters that is missing.

But isn't there a more basic flaw in the system.

When someone asks me if I'd like a new park with a really neat playground for the kids and I know that I will not have to pay more tax for it because I am protected by the homestead cap -- do you think I am a trustworthy watchdog of public spending?

[James B. Johnson]

Piper
Homestead exemption exists because the Republicans confiscated prime real estate during Reconstruction in Florida. They confiscated property using taxes to do it.

So! When the Democrats returned to power after 1876 they enacted Homestead Exemption. That is, homesteads were protected from taxes by a high discount amount. In 1960 it was about one-half of the value of the average Florida home. In 1980 or so, it was about the same percentage (my $50,000 house had a $25,000 exemption).

SOH keeps my home at about the same ratio. Its valued at about $150,000 but I pay on 75-80 THOU.

What newcomers dont get is: Theyre paying grossly inflated prices for their homes AND theyre creating all of the need for new services etc.

SOH does exactly as its intended. It protects me from you.

[Piper]

James, please excuse me for breathing. It is rather presumptive of you to claim I am a new comer, is it not?

Whatever, let me be clearer. The exemption part of the homestead program has a logic to it that is quite different from the cap logic. If all we had was an exemption then when you become wealthier because of all of the crazies willing to pay more for your house, your taxes would go up. Because of the cap they do not (except for the inflation based index).

Using your example, your property value has increased by an average of 5.5% per year, while your taxes have increased by less than 3% per year. Now if tax rates doubled tomorrow you would not pay any additional taxes. And if they were cut in half you would not pay any less.

My point is that you are no longer affected by tax rates. I presume that you, personally, would not support things that you considered wasteful, but how hard would you resist them - since they do not cost you anything? And how about all of the folks that are less responsible than you? Do you think they would object to a little more spending if it did not cost them anything, especially if it was for something they kind of liked?

You probably need to be protected from me, but not for the reason you think. I believe that the cap is poor public policy. There are other ways to protect people from losing their homes to rising taxes without creating the situation that we have with the caps as they are currently implemented.

[Piper]

Well, ignorance may be bliss, but it sure can be embarrassing.

My previous post is wrong -- probably should just be removed -- but I can't do that.

I mistakenly treated the cap as a limit on the taxes paid. That is incorrect. The cap is a limit on the change in taxable value of the property.

So, James, you would in fact benefit from a lower tax rate and my post is just wrong.

Hey, Trox -- how about just killing this and the previous post?

[MARION OYSTER]

howard, I think we need to put a stop on city and county officials from using tax payers money to stop tax cuts. peopleneed to keep there homes more than they need parks,trails and fancy medians.