The News Service of Florida reported Feb. 3 that after reviewing Gov. Rick Scott's proposed tax cuts for the coming fiscal year - which would be worth $673 million - the Finance and Tax Committee unanimously supported a proposal, HB 138, which would raise the amount of corporate income that is exempt from state taxes.
Corporate income tax policy
Sen. Dorothy Hukill, R-Port Orange, the chair of this committee, proposed the new policy, which would allow companies to generate up to $75,000 in income per year without paying corporate income tax at the state level, according to the news source. This figure would compare to the current level of $50,000, according to the media outlet.
The proposal also obtained the approval of the Senate Banking and Insurance Committee, which recently voted 10-to-1 in favor of the measure, News Service of Florida reported. The only lawmaker who opposed the measure was Sen. Jeff Clemens, D-Lake Worth, who stated at the time that he prefers tax cuts that affect individuals and the middle class.
In addition to receiving broad support in both of these committees, the proposal won the backing of both the National Federation of Independent Business and the Florida Chamber of Commerce, according to the media outlet.
With all this momentum, Hukill has stated she is more confident about her proposal's prospects this year after lawmakers left it out of the final tax - and fee-cut package they finalized last year, the media outlet reported.
"The assumption is that if corporations pay less to government in taxes they will spend more on capital and salaries and it will help job creation," she stated earlier this month when explaining the main draw of her proposal, according to Miami Herald Blog.
Abolishing corporate income tax
However, Hukill's proposal would cost Florida approximately $7.6 million in tax revenue in the 2015-2016 fiscal year, and $18.7 during 2016-2017, the media outlet reported. Even with this loss of income, the current plan involves gradually eliminating the Sunshine State's income tax over time. Florida imposed this burden in 1972, levying a 5 percent rate, before increasing this amount to 5.5 percent in 1984.
One lawmaker who would like to see the state's corporate income tax eliminated over time is Sen. Wilton Simpson, R-Trilby, according to The News Service of Florida. Lawmakers increased the exemption to $50,000 in 2012 from the prior level of $25,000. As a result, 3,770 companies were free of income taxes. Prior to this move, in 2011, the state increased the level to $25,000 from $5,000.
While the state certainly seems to be moving toward abolishing its corporate income tax, one lawmaker has called for more careful analysis, the media outlet reported. Government officials should ask Florida's top economists to evaluate the varying proposals, insisted Sen. Darren Soto, D-Orlando.