Editorial: Legislature's proposed tax fixes are too much, too soon

Yahoo

26-04-2025

By any measure, Florida's tax system is a mess. Independent reviews show it to be fundamentally unfair, with one group awarding the state the dubious honor of having the most regressive tax system in the country. The problems are almost certainly exacerbated by the fact that responsibility for some of Florida's biggest revenue streams is split between state and local governments in a way that makes it almost impossible to untangle the responsibility — and blame — for the most consequential tax-and-spend decisions.
So it's not hard to understand the Legislature's desire to improve matters. Unfortunately, many of the proposals floating around this session — especially those that would shift money around in dramatic ways, without the intensive study and opportunities for public input such big changes demand — are too radical to adopt on the fly. There's definitely room for a few modest reforms, based on proposals that have been floating around for years. One key example: giving county governments a little more flexibility on how they spend so-called 'bed taxes.'
But the big adjustments should wait for at least a year. That would give state leaders the chance to take their show on the road, explain the proposed changes to Floridians and listen to their input — particularly from local government officials who need time to prepare for major changes.
There's little argument that the state's current distribution of tax burden is unfair, but the dubious conclusion that Florida had the most unfair and unbalanced tax system in the country as of 2024 still came as an unwelcome surprise. In its annual 'Who Pays?' index, the Institute for Tax and Economic Policy found that the poorest Floridians — those in the bottom 20% of household incomes, existing on less than $19,600 a year — paid a staggering 13.2% of their annual income in state and local taxes. Meanwhile, the top 1% forked over less than 3% of their income in taxes. And that calculation doesn't include Florida's loophole-riddled corporate tax structure, which lets national and international corporations with a significant presence in this state get away with paying almost nothing in taxes.
That goes a long way toward explaining why Florida ranks so low in per-capita measures of general well-being, including the quality of its schools, access to medical and mental-health care and the condition of its roads and other critical infrastructure. Any major changes would have to take into account the rippling effects on public education, criminal justice, local amenities like parks and libraries and other services people depend on their governments to provide.
Both the House and the Senate are proposing big changes to the way taxes are levied in Florida. But they target different revenue streams. The House plan (HB 7033) is arguably the more radical; it would slash the state's 6% sales tax rate to 5.25% — a move that, by itself, would carve $5.6 billion from the state's annual revenues — and force similar cuts in other taxes including the tax on electricity and commercial rents. It would also divert tax money raised for specific purposes into property tax relief.
There may be some good ideas in the House bill, but it's too much to accomplish in a single sweeping move. The state's tax structure is too fragile and riddled with loopholes to revise on a whim, with little opportunity for public debate or input.
The same can be said of the Senate plan, though it's not as radical as the House version. The Senate wants to carve a gaping exemption into Florida's sales-tax stream, eliminating sales tax on clothing sales under $75. By itself, this exemption would drain nearly $900 million from state coffers. The Senate also wants to spend more than $600 million on a cut to vehicle registration fees and put $237 million toward two months' worth of tax breaks on a wide variety of recreational expenses, including concert tickets, gym memberships and camping supplies. There are other one-time breaks in the Senate tax package (SB 7034) including familiar back-to-school and emergency-preparedness tax 'holidays.'
It also endorses a proposed constitutional amendment for the 2026 ballot that would ask voters whether to reduce or eliminate property taxes, the main funding source for local governments and public schools. That's a dangerous idea, because it would isolate a major change from its natural ramifications.
One provision in the Senate tax package deserves separate consideration. Sen. Carlos Guillermo Smith, D-Orlando, has offered a proposal to give local governments flexibility in the way they spend the tourism development tax (TDT) and his proposal is currently included in the overall Senate tax package.
The tax, which can be up to 7% on the cost of hotel rooms and other tourist-driven expenditures, has produced a bounty of unspent funds in areas like Orlando — leading to absurd decisions like last year's agreement to fund $560 million in expansions and renovation of the Orange County Convention Center, already one of the largest facilities of its kind in the nation. Diverting some of that bounty to the area's overburdened road network makes sense, especially since the most tourism-dominated parts of the county already have some of the county's worst traffic congestion. Other counties might not benefit as much as Orange County, but if more flexibility works well here, it could guide decisions in other parts of the state.
We also like a proposal to study Florida's property-tax structure ahead of the proposed 2026 vote, but there's legitimate concern that such a study could be easily manipulated.
And as with the House bill, we think any proposal that causes billions of dollars in upheaval deserves a more measured, thoughtful approach. It's notable that both House and Senate bills are already riddled with special-interest loopholes — breaks on guns, bicycles, mobile-home sales and other limited-benefit expenses among them.
Nobody is claiming that Florida's tax structure is perfect — far from it. But there's no imperative to rush. Time, and thoughtful study, could provide critical insight that would help Florida craft a fairer, more balanced and stable tax structure. That time costs the state nothing, and ensures that Floridians have an ample opportunity to review various proposals and speak up about their own spending priorities. This state's residents deserve that consideration.
The Orlando Sentinel Editorial Board consists of Opinion Editor Krys Fluker, Executive Editor Roger Simmons and Viewpoints Editor Jay Reddick. Contact us at [e-mail]