Governor Rick Scott has launched a bus tour as part of his re-election campaign based on his state’s 2014-2015 executive budget, dubbed the “It’s Your Money Tax Cut Budget,” according to the Florida Gubernatorial website. The budget intends to cut $500 million in taxes by paying down debt, eliminating government waste and reducing taxes and fees.
In the governor’s budget highlights, Scott claims that this move will help to create more jobs and increase growth in the Florida economy. The plan features seven key policy decisions, including:
Eliminating sales tax on commercial leases
Introducing new tax holidays worth an estimated $200 million
Further reducing state corporate income tax
Eliminating sales tax on manufacturing equipment
Reducing local telecommunications service sales tax
Reducing automobile registration fees
Introducing a constitutional amendment that restricts property tax increases
Reactions to the budget have been mixed. While proponents argue that these reductions in taxation will help to create an economic environment more favorable to business, helping to drive growth in the state, opponents argue that the state lacks the funding to accommodate these tax cuts.
An analysis by the Tax Foundation, a Washington tax think tank, examined the proposal and gave it a mixed review. It is worth noting that the Tax Foundation is generally considered to have a conservative slant, making it somewhat surprising that the organization declined to back the budget proposal.
The main points that the Tax Foundation criticized were the restrictions on property tax assessment and tax holidays. The think tank stated that, while restricting property tax assessments can reduce local taxation, this is only possible via accompanying legislation that restricts property tax rates, standardizes assessing practices and limits other local revenue sources.
Tax holidays increase compliance burdens and do little to promote economic growth, the foundation argued. While tax holidays make for good politics in an election year, the policy can be distortionary and is less effective than reducing sales tax revenue through a narrow across-the-board reduction in rates.
The members of the Tax, Trust & Estate group at Scarinci Hollenbeck have written extensively on the subject of tax cuts. So, check out some of our previous posts to discover how our leader’s tax cuts are affecting the nation:
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