Thursday column: A tax on land, or at the register?

Here's today's column -- tell me if you think it was or wasn't useful. It ended up being a little more of an explainer of the tax swap than a complainer about the commission's rejection of a services tax...

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Hey, if you're a property owner, how'd you like to pay a lot less in school taxes - way less than half of what you're paying now?

Wait. Here's the flip side of that same question:

No matter who you are, how'd you like to pay a higher state sales tax?

That's the latest tradeoff being proposed for Florida.

This is a different idea from Amendment 1, which the voters passed in January for a higher homestead tax break.

Instead, this "tax swap" is one of the ideas being kicked around by a group called the Taxation and Budget Reform Commission, which meets every 20 years to recommend changes to our tax system.

[Link to entire column]

Comments

[Jim Johnson]

Re-arranging deck chairs on the Titanic.

Missing from the debate is the value & utility of what taxes buy, and the stewardship of elected officials.

Whether we need more poetry professors isnt even considered.

[Larry]

Agree with Jim. Why are we always messing with the education part of the problem. We already know we are running our schools and universities "on the cheap". Tinkering with that portion of the property tax problem is not necessary. Taxes on property are more stable and reliable. What happens when the huge recession, that is already upon us, drops spending and tourism to levels that do not sustain the projections expected. Where does the money to fill the gap come from. To me, we are still not addressing the underlying problems with the inequities in the property tax structure. As Jim points out, we are merely rearranging the deck chairs on the Titanic. And education will suffer yet another financial disaster.

[Bob Hackworth]

At least this proposal would treat ALL property owners equally. At least this proposal would give them ALL REAL property tax relief. At least this proposal would allow landlords renting to low income renter to offset those renter's higher sales tax payments with lower rent.

To your other question, is your column a complainer about the commission's rejection of a services tax, I think it correctly points out that both the legislature and the commission refuses to address the REAL issue.

[Clinton Tyre]

Unfortunately, you missed the key point in the proposal. What passed the commission, if approved by the voters, would prohibit the legislature from extending the sales tax to services. That is a fatal flaw. So we will now write into our constitution a prohibition on taxing services just like the income tax. You could eliminate ALL property taxes if replaced by a services tax. Now that would stimulate the housing market and bring our tax system into the 21st century.

[Chris Jenkins]

Howard, you note that the sales tax is "regressive", in that the proportion paid works out to a small percentage of overall income for rich folks.

Who buys the Lamborghinis? Who buys the 7 figure mansions? Who buys the private jets, the platinum bath tubs, the Russian Caviar and the Kobe beef?

High ticket luxury items, purchased only by rich people, help offset that "regression", which is questionable math to begin with.

When a poor person buys a $20 pair of shoes, and pays .20 in tax, and a rich person buys a $200 pair of shoes, and pays $2 in tax, what's inequitable about that system?

[Rich]

I think it's a shame they didn't include closing the service tax loopholes. Consumption should be taxed. It encourages saving which plenty of people need to do more of.

Howard, I know you think sales tax is regressive but I think SOH hurts the poor even more as they tend to rent and get no benefit from homesteading. Take this scenario: Renter living in a $100,000 house pays approx. $2,500 in tax by virtue of his landlord passing on his cost. Do away with property tax and increase sales tax on non-essentials by 2.5 cents. If the landlord passes on those $2,500 in savings then the renter would have to spend $100,000 on non-essentials in a year in order to pay the same amount in taxes.

Sales taxes encourage consuming less and saving more. That's why the service industry and retail industry lobby against them. I don't think they hurt the poor as many people think especially if essentials are not taxed.

[Kay]

Chris, because the poor person only has that $20.20 in disposable income and the rich person has another $2000 that they don't HAVE to spend to SURVIVE. And by the way, shoes are necessities (not the $200 kind though). So when someone says that necessities are not taxed (food/medicine), that is false. I have to wear clothes and so does my child. Everyday.

[Suzanne]

Chris is right on - let's not forget that tourist will help us pay a big part of this. It's easier to pay small amounts here and there than BIG chunks - obviously property tax is giving everyone a hard time and is the biggest burden to the housing and FL economy. I don't hear anyone complaining about sales taxes being too high or not being able to pay them? Free homeowners of high property tax and the poor renters will get a break, they need housing to be affordable. Look at the mess we are in with foreclosures in this state!

[Suzanne]

Chris is right on - let's not forget that tourist will help us pay a big part of this. It's easier to pay small amounts here and there than BIG chunks - obviously property tax is giving everyone a hard time and is the biggest burden to the housing and FL economy. I don't hear anyone complaining about sales taxes being too high or not being able to pay them? Free homeowners of high property tax and the poor renters will get a break, they need housing to be affordable. Look at the mess we are in with foreclosures in this state!

[Rich]

Kay,

Property tax can also be considered regressive. The fact is if you rent you will pay a greater percentage of your income every year due to the fact that your rent will rise as the taxes your landlord has to pay rises. Those wealthy $5 million dollar mansions are homesteaded so their percentage of taxes actually go down.

Food/ medicine/ clothing/shelter should be exempt from taxation up to a certain $ amount. Above and beyond that amount should be taxed at the same rate regardless of income. No reason why a wealthy person should have to pay more tax on a Bucs jersey than someone who makes less money.

[guy]

In this case I don't think it's like rearraanging the deck chairs.
Howards article today was precise and informative to me.
I think a sales tax would maybe not be a bad thing.
The tourists would pay their fair share, which is not being done.
I know that I have to be careful how I spend all year long waiting for the Tax bill that somehow is always in the mailbox Nov,1.
The numbers in your article seem to make a lot of sense Howard.

[guy]

The problem we face is that the legislators will talk about this for at least 10 years before they act, and the State will be in a totally different bind for funds than we are now.
Thats why Amnd#1 was good, it was a tiny step in the right direction that has been all talk for years.
Like SS has been going broke for 30 years and they are still TALKING.

The problem never has been, is not now, and truly shouldn’t be the “act” of paying taxes.

Although professional political marketers (Rove types) have done a bang-up job at convincing Americans that paying taxes is all about Red-v-Blue, left-v-right, liberal-v-conservative, ect…

The problem has always been, is now, and will continue be what the deceitful, fat-cat politicians do with our taxes…

Vote ALL incumbents out, and lets stop the cycle.

[A Proletariat]

Howard,

Do you ever get the sense that we have somehow crossed over into another dimension?

Why don't we just send a 'group' memo (group meaning FL taxpayers) telling Tallahassee to just go ahead do whatever the hell they please, we don't care anymore. Because I think it's pretty apparent by now that they have no intentions of correcting this situation; they're just moving the shells around - again.

This insanity isn't just limited to FL, they're going to lift the caps at Fannie and Freddie so they can expand their portfolios; at a time when both entities are reporting record losses in the billions.

Let me guess what's going to happen next... as Freddie and Fannie begin absorbing huge amounts of toxic paper from the financial markets, drum roll please...........................
you guessed it, the American taxpayer is going to bail out wall street.

Why don't we just get up in the morning, go to work and on Friday just mail our entire paycheck to Washington DC and call it a day!

Pass the Soma!

[guy]

When we moved to Fla in 1980 the property values were so much lower than Ct, and Ma. that I bought a couple of pieces of property for rent income.
I have alway's kept these properties in top shape.
But now the taxes are so high on them that they are about breaking even.
The only way to recoup would be to raise the rent on people that I know can't afford more than they are paying, people that are friends.
But this situation is seen by most as "Get the big landlord"
signed "Simon Lagree #2" ``

[A Proletariat]

P.S.

In the infinite words of Ben Stein:
"Why bother to even discuss balancing the budget? Why have taxes at all? Why not just print money the way Weimar Germany did? Why not abolish taxes and add trillions to the deficit each year? Why don't we all just drop acid, turn on, tune in and drop out of responsibility in the fiscal area? If deficits don't matter, why not spend as much as we want, on anything we want?"

Sales taxes are regressive.

What do we do about all our border towns, Pensacola, Jacksonville, Tallahasee and their population that will decide to purchase cars, boats, computers in an adjoining state to avoid higher FL taxes? What'll do to their local economy?

Secondly, some of sales tax is built on the notion that tourists will continue to flock back despite having to shell out more. I'm sure other coastal states would love this to pass as it'll mean more business or them. The mentality that tourists don't pay their fare share is short-sighted. They are the bread and butter of this state and come here for a week or so, drop $ at much higher rates than locals, support our hotels, restaurants, workers, ect. As annoying as having them on our roads is, we need to encourage their visits, not discourage.

We all want a lot for free and forget that there are only two assured things in life...death and taxes.

[Rich]

You must work for Disney if you think people will start going to Mississippi for vacation instead of Florida because of a 2.5 cent increase in sales tax. I believe that was the same reasoning they used back when we first raised sales taxes and it was proven wrong. Either that or you are a lobbyist for the retail or service sector.

If you want to drive across the border to save a few bucks then so be it (not sure what Georgia or Alabama sales taxes =) but I'm sure you will be in the minority. Many buy computers over the internet anyway and if you think you are keeping great jobs around by shopping at your local Best Buy than you might be a little naive. Don't Hillsborough and Pinellas counties have different sales tax rates? Do you drive over the bridge to go shopping?

Like I said SOH hurts the poor more than an increase in sales taxes would. They may not pay the tax directly but their landlords pass on the expense and they do not get the benefit of homestead.

[Rich]

Let me ask those who think sales taxes are regressive for the poor a question.

If one person makes $100k a year and spends every penny on taxable goods and another makes $10k a year and spends it all on taxable goods then is your tax no longer considered regressive?

Sales taxes encourage people to save. That's why the retail and services industry don't want them. It's actually a regressive tax on those that choose to spend more than they make. People who save more would benefit. It would encourage saving.

The fact is SOH hurts the poor more than any sales tax ever would. They still pay the property taxes only they are passed on from the landlord so they don't directly pay them. That landlord doesn't receive a homestead exemption so rents increase due to higher taxable values.

[Chris Jenkins]

Right on, Rich.

[Howard Troxler]

Rich, Howard here, I think your analysis is exactly correct. The trick, however, is that the rich person has to spend 100 percent on taxable items -- and THAT is where the regressive nature comes in.

See, Chris, you talked about cars and such. I would be more in agreement if the county-option portion of the sales tax were not capped at $5,000. So a guy buying a used Ford is paying the same as the Ferrari guy.

The trouble is that the exemptions to the sales tax, and the exclusion of a tax on services, skews the system.

Bug spray: taxed. Pest control: Not taxed.

Gas, lawn mowers: taxed. Lawn service: not taxed.

Detergent: taxed. Dry cleaning: not taxed.

Shoes for your kids: taxed. Estate planning, accountants, landscape architects -- not taxed.

The argument that the system is "fair" because the rich and poor are taxed alike ON TAXABLE ITEMS brutally ignores the reality -- the more money ya got, the higher the percentage that you are spending on tax-free goods and services... whereas the poor guy raising kids & maintaining a house at the low end is spending almost 100 pct on taxable goods...

Cheers to all.

[jackie]

Nothing can be 100%fair. Life isn't all Fair. FAIR, fair, fair...........Everyone benefits to some degree with the needed tax reform. Right now in Florida the simple middle class are getting slaughtered with property taxes and insurance...........FAIR? Saved for a down payment for yor first home, good deals are out there, go out and buy a house then choke at your property taxes and insurance payments....FAIR? What are your neighbors paying? Fair??????? Life is so FAIR.

[Jim Johnson]

On behalf of regressive taxation, it's the po folkses who suck up the lion's share of the taxes. Jails & prisons, child abuse investigations, special ed programs, welfare, mental health services, etc. They get a belly full of services.

[Jim Johnson]

Nonsense, Howard. The guy on the bottom is likely getting food stamps, medicaid, section 8 housing, free school lunches, pays no income taxes, etc. They buy beer, cigarettes, and sugar-craps. Pot & crack isnt taxable.

I have been amongst them and know what they spend their money on.

[Rich]

Howard,

Owning or renting a home is a basic neccessity(property tax).

Discretionary spending is not(sales tax).

I guarantee the poor pay a greater share of income towards rent than wealthy people but somehow property taxes aren't considered regressive?? And yes renters do pay property taxes indirectly and they can't cap their growth like homeowners can.

I would argue that wealthy people actually spend a greater percentage of their income on discretionary, taxable items while the poor have far less discretionary income (on a percentage of income basis) to spend on taxable items.

Say a wealthy person spends 30% of income on taxable discretionary spending while a poor person only has 10% of discretionary income left after rent, food, clothing, medecine, etc? Would sales taxes then be considered regressive?

They need to exempt food, medecine, clothes, property, electric, and water (neccessities) up to a certain dollar amount and tax everything else (discretionary) including services at a flat sales tax rate. The owner of a $2M mansion pays a one time sales tax on $1.95M while a landlord of a $50k rental property pays no tax. A young mom pays no sales tax on a $10 shirt for her kids but a Bucs fan pays tax on $140 of a $150 jersey.

I totally agree that service tax loopholes need to be closed. Lobbyists have way too much power. Even over this commission.

Funny article in the paper the other day about the civil courts that are threatining to lay off people and restrict hours. I bet they could afford to stay open if lawyer fees were taxed and used to pay for the shortfall.

Imagine that concept. Lawyers actually paying the taxes to support where they do their business.

[Kay]

Rich,
I mostly agree with you.
It would be great if taxes were removed on necessities up to a certain dollar amount. I would be more supportive of a sales tax increase if that were part of the plan.
I do currently rent and I've also owned. I have noticed lately that rents all around me are going down. Mine just went up! I would move but it really is not cost effective in my circumstances.
btw, how's Beavis?
Kay

[Jim]

I Realy like the compromise tax swap proposal.

Put it on the ballot & let the voters decide!