The House Economic Affairs Committee Friday rewrote a property-tax cut pushed by Governor Rick Scott. James Call reports the rewrite was a success and the proposal to create a new exemption for tangible property passed on a unanimous vote.
The proposed constitutional amendment stalled a couple weeks ago over concerns about the cost to local governments. The sponsor, Orlando Representative Eric Eisenaugle hammered out a compromise that had lobbyists practically tripping over each other to voice their support. The League of Cities urged a yes vote:
"This is a good day; this is a day that we have all come together."
The small county coalition dropped its opposition:
"i think it is a good compromise and I look forward to the collaboration."
The Federation of Independent Small Businesses praised it:
"More than any other economic proposition you see out there this is the small business agenda."
And Associated Industries, the self-proclaimed voice of Florida’s business gave a thumb up:
"I will finalize the kumbayahs and say we love this bill."
The outpouring of support surprised Coconut Creek Representative James Waldman who had been sympathetic to concerns raised by local governments. Waldman complimented Eisenaugle for forging a compromise.
"I compliment you on the fact that you got the cities and counties to agree I just can’t believe you did it."
To which Eisenaugle replied:
"I think my career is complete now, feel like I hit the pinnacle."
The compromise that silenced the opposition consists of two parts. One the exemption would apply only to businesses that have $50,000 or less in equipment, like furniture, equipment and so on. And two, there is a local option. Cities and counties could increase the exemption limit by holding a local referendum. Tarron Bragdon, of the Foundation for Government Accountability, a Naples-based organization that supports free market and small government principals, testified the local option will make Florida an entrepreneurial haven and give it the best tax environment in the southeast.
"There are two states that provide this local freedom and flexibility for TTP taxes; One is Vermont and one is Alaska, and on the backside of this handout you can see what happen in Vermont. Over a 20 year period, counties voluntarily, and in their own way, morphed into providing no business tax for 77 percent of the counties."
The governor’s office estimates the statewide impact would be about $20 million to cities, counties and school districts. The National Federation of Independent Small Businesses says the average saving for what spokesman Bill Herrle referred to as the smallest of small businesses would be between $400 and $800.
"And a $50,000 exemption can encompass many start-up businesses. Statistics show we are going to be taking 156,000 businesses off the tangible property tax tax roll. They are going to be able to focus on getting their start up business going. Growing their business. And it is all good to us."
After the committee voted to give the resolution a favorable recommendation, Waldman explained that a tangible property tax for small businesses does not make much sense. He referred to it as more of a nuisance than anything else.
"Just having your accountant to do it or to comply with it actually, in some instances, costs more than the tax you would be paying. You would be paying a $100 or $200 in taxes but you would have to pay your accountant $500 or more."
The joint resolution for the proposed constitutional amendment to exempt small businesses from the tangible property tax now goes to the House floor. Its senate companion is before the budget committee. If it makes it to the ballot and is approved by voters, the exemption will go into effect January 1, 2013.