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Gov's corporate tax break DOA in senate

By James Call


Tallahassee, FL – A revised proposal by Governor Rick Scott to phase out Florida's corporate income tax is on life support. James Call reports, the Senate Commerce and Tourism Committee put it on hold Monday at the request of its sponsor. Senator Garrett Richter.

"Members I would suggest to you that Senate Bill 1236 is probably the most significant job creation that we have."

At the intersection of tax cuts and job creation stands Naples Senator Garrett Richter. When presenting a corporate tax cut proposal to the committee, he cited a study that correlates new jobs with a reduction in corporate expenses.

"I accept that logic if businesses have reduced expenses they can go hire and expand their businesses. I think you will see that I believe the safety net to this is that we are looking for growth in revenue-- growth in revenues from the prior year given the formulas that I talk to you about a few times, here now growth in revenues before we apply reductions."

The idea stalled when talked turned to a formula to phase out the current 5.5- percent corporate tax rate. Richter proposed cutting it by one-percent the first year and then future reductions would occur only if other revenue increases enough to offset losses. An incremental approach is designed not to reduce the state's general revenue, in essence to be revenue neutral.

"You say tomato I say to-mah-toe. I can say, 'yes it's revenue neutral', others can say we had that growth anyway. ,So somebody could say 'how can it be revenue neutral if you are reducing the tax?' I don't think it's revenue neutral, I think it is revenue-positive because I believe the outcome will be higher. Higher jobs, higher job creation, higher wages. So, I guess you can say it could be positive."

The first year one-percent reduction would come with a 333-million dollar cost to the state budget. The cost could triple to a billion dollars by 2013. That's a price too steep for Tallahassee Senator Bill Montford. He said lawmakers are making deep budget cuts and asking citizens to sacrifice too much to hand out a corporate tax cut on a promise it will eventually produce jobs.

"We have people who are hungry today. We have people who are trying to make a living today. We have our state workers facing taking home less money because of the decision we will make by adding to their pension plan. State employees and others will be paying more for their insurance. So the two, to me doesn't fit. How can we lower corporate income tax today and raise taxes if you will on our state employees and others? The two just don't fit."

Other committee members expressed concern about stopping a stream of money into general revenue. The proposal was submitted Friday. Richter worked with the Governor's office on to get talks started on eliminating the corporate tax. However he concedes there are some unanswered questions and the proposal needed more work. He asked the committee to temporarily postponed the bill. The committee has no more meetings scheduled this session. And Chairwoman Senator Nancy Detert said the idea is in trouble but was not prepared to declare it dead.

"They could strip the language off this bill and put it on other corporate bills that are moving, so. This bill as it stands probably is dead but you could still put that language on another bill. So define dead. This could be an upstairs decision."

That is one of the final pieces in a budget agreement between Senate President Mike Haridopolos and House Speaker Dean Cannon.