Property Tax discussion

Today's session was not what I expected ... I anticipated a nuts-and-bolts discussion of the new property tax portability.

Today's session was VERY informatiove, but before I delve into it, I mentioned yesterday that I recently attended a training telling precisely about the new law, and I will be posting that information in due course.

So, back to today's session: The guest was State Representative Ron Reagan, and we did talk a lot about property tax, but in a larger, public policy sense rather than nuts-and-bolts.

A couple of years ago, there was an initiative to abolish property tax altogether in Florida. This did not get very far, which may sound surprising at first, but makes some sense after you understand more about it.

Abolishing property tax would be made possible by raising the sales tax rate by about 2.5%, so state sales tax would have gone from the current 6% to 8.5%. In other words, the same number of dollars still has to raised some way, but the method would have been different. Why make such a change?

The main reason is that sales tax is more equitable; in other words, the people who are actually here, buying goods and services in the state of Florida, usig the roads and so forth, would help pay for the cost of the state-provided services. Property tax, on the other hand, is an inherently inequitable way of funding state services. That gets in to a whole other blog topic all by itself, so we won't get started ... yet!

But to return to why abolition of property tax didn't get too far, here's why: it would be political suicide. Anyone who voted to raise sales tax 2.5% would be accused by his opponents of "Raising your taxes!" It wouldn't be true ... the same number of dollars get collected and spent ... but that won't matter. The sound bite rules, and the voters would only hear, "He DID raise my taxes!" and that would be it for that politician.

I like the abolition of property tax because, as it is, even if you pay off your home in Florida and own it free and clear, you still don't quite own it. That's because if the property taxes aren't paid, the state will come and take it away from you. Something about that just rubs me the wrong way!

There are several constitutional amendments that will be on the ballot this November that have to do with further reform or property taxes, and I'm glad I got to hear about them from Rep Reagan.

One of them, Amendment 5, proposes to eliminate the school tax portion of the property tax bill, which will reduce property taxes about 25%. It does not allow a drop in school funding, so the money has to come from someplace else. The impact of the bill is to reduce tax revenue by about 8 billion; the sales tax will almost certainly be raised 1%, which will replace 4 billion of it. Economists say that the increased economic activity resulting from the property tax relief will amount to at least another 2 billion (interesting!) and that leaves 2 billion to make up another way.

There several other amendments and I want to come back to them in another blog. For now, though, you can read about all 9 amendments to be voted on this fall at

http://election.dos.state.fl.us/initiatives/initiativelist.asp?year=2008&initstatus=ALL&MadeBallot=Y&ElecType=GEN