House to ask voters to trade property tax for more sales tax

[pgurney]

Anyone see this? What do you guys think about it?
http://www1.wsvn.com/news/articles/local/MI40248/

TALLAHASSEE, Fla. (AP) -- Florida homeowners could see their property tax bills drop by nearly 20 percent this year under a House plan released Wednesday that would also give voters the option of abolishing the property tax on primary homes, trading it for higher sales taxes.

The proposal would also cap the amount local government tax collections could grow each year unless local elected officials unanimously agree to raise more.

House Speaker Marco Rubio unveiled the proposal, which calls for a special election later this year in which voters would be asked to eliminate all property taxes on homestead property -- the primary residence on which a person has a homestead exemption. Taxes would still be paid on vacation or second homes.

If voters approve the elimination of the property tax, the state sales tax would be increased to 8.5 percent from 6 percent. That's aimed at helping local governments absorb the impact of losing property tax revenue.

More at link.

 

[Smiling JOe]

I've been hearing about this. One problem is that the cap is not really a cap since it can be raised.

I'm wondering if the current Mayor of Panama City will be able to have both of her homesteaded properties be tax free... She has had homestead on two houses for over 15 years and is only recently being busted for it.

With all of the "unfair" comments on the current Save Our Homes Act, I think many out of state owners will have much more complaining to add to their lists of complaints regarding the property tax situation in Florida.

 

[Beachlover2]

This will not help the RE market - Second homeowners and investers will not like being the ones to pay the bill.

 

[TooFarTampa]

This will not help the RE market - Second homeowners and investers will not like being the ones to pay the bill.

It may not be great for many SoWal buyers, but it sure would kick-start the RE market statewide. Guaranteed.

There are many thousands of residents who would love to upsize or downsize but feel trapped in their homes thanks to the Save Our Homes cap. The flaws in that well-intentioned law have been exposed by the RE runup of recent years.

The sales tax proposal is much more intriguing than the Crist camp's "Save our Homes portability" proposal, which would only increase the inequities in the tax laws.

-- While sales taxes are usually regressive, this may not hurt the lower income renters too much, since their rents have been climbing thanks to the landlords' higher tax bills. The House is talking about extending the initial 20 percent rollback to non-homesteaded properties like rental homes and vacation homes, so in reality the renters may not be affected that much, and SoWal non-homesteaders will benefit, at least a little.

-- As for SoWallers in the long run, that remains to be seen, but keep in mind SoWallers are NOT subject to the higher millage rates in incorporated areas. Millage rates in Tampa and St. Petersburg for example are in the 26-28 range, where in Walton County it is under 10. Taxes really are more affordable in SoWal than many parts of the state.

-- It may hurt some of the fixed income retiree homeowners, since their paltry property tax bills will be eliminated and sales taxes will go up. However they are not usually big consumers so most of them may actually benefit.

-- Those residents with middling tax bills will benefit, and those with the highest tax bills will benefit a LOT. Though the higher-tax-bill people will lose a very large federal income tax deduction, and their income taxes will go up accordingly. How much extra money would the feds get? I am wondering. :scratch:

-- Tourists will complain but come anyway.

-- Businesses might be hurt the most. They started complaining loudly yesterday. Unless they are protected in some way, this proposal probably won't have legs simply because the businesses could be hurt so badly.

-- If everyone is protected, that means a huge spending cut for most or many governments, and what exactly will happen to services?

At the very least it shows the Legislature is considering all changes, no matter how radical. My guess is they will end up doing something drastic that will really help the RE market.

Prediction: House and Senate roll back all property taxes by 20 percent or so, then institute an inflation-adjusted spending cap. :clap_1: It would help everyone.

 

[Geo]

I'd like to hear from folks who have their primary residence in FL. I recently moved to Santa Rosa (full time) and would benefit from this. My impulsive thought is that I would be in favor but I would like to hear more from the other side...

Pls give me something more than-

"Visitors or second home owners don't want to pay for the homesteaders' property."

Has this been done elsewhere? How did it go? What was the impact? Were the expected benefits recognized? Were there unexpected consequences?

I think I am in favor but would love to see some intelligent debate here to help me finalize my opinion...

Cheers,
G

 

[TooFarTampa]

I'd like to hear from folks who have their primary residence in FL. I recently moved to Santa Rosa (full time) and would benefit from this. My impulsive thought is that I would be in favor but I would like to hear more from the other side...

Pls give me something more than-

"Visitors or second home owners don't want to pay for the homesteaders' property."

Has this been done elsewhere? How did it go? What was the impact? Were the expected benefits recognized? Were there unexpected consequences?

I think I am in favor but would love to see some intelligent debate here to help me finalize my opinion...

Cheers,
G

Geowickey how big of you to try to see the other side. Most homesteaders are jumping up and down with glee.

I think this is kind of radical. I don't think it has been done before and the numbers have not been crunched enough yet. How much of the tax burden would fall on the cities and counties (ie shortfall of funds), how much would fall to the tourists, and how much would fall to the non-homesteaders remains to be seen, from what I have read.

I have read that other states who have higher sales taxes and lower property taxes also have state income taxes, which we don't here (a sacred cow btw).

This definitely would require a constitutional amendment, and it could go on the ballot as early as this fall. It's too early to try to finalize an opinion ...

 

[Smiling JOe]

One thing I like about this idea is that all of the cheap plastic crap which is purchased here will be partially paying for homesteaded property taxes.

A while back, I said that we can expect more second homeonwers to "move" to Florida as their choice for homestead. I think we will see this happen if this new tax idea is approved. It sure will be helpful in keeping those 1,000 people per day, moving to Florida. This would be a big draw for those baby boomers already thinking about warmer sunny days. Since we don't have sales taxes on groceries, I think this idea could be very popular among those who are on fixed income. It is more like a spending tax. That is also the downside, that people might be less likely to purchase consumer goods. With only a 2.5 cent increase per dollar, it most likely wouldn't affect many people's decision to purchase items, but if the cap can keep being raised, we might eventually hit a point where it is affected. I doubt it will affect tourists' decision to purchase, those are the people who put the meat on the table for Florida.

I believe that with time, it will be very difficult to find employees to staff the businesses in our area. It is already rather difficult. This could be one saving grace to help keep people here to staff the services and businesses upon which we rely. However, it is true that many of those people cannot afford to live here anyway if they do not already own, but for those who have owned, it will be a welcome relief, and maybe the one thing that keeps them here.

 

[ShallowsNole]

I don't like this idea at all. What I have heard is that a 2.5% increase in the state sales tax would only reduce property tax, specifically the portion appropriated to schools. To scrap property tax completely, the state sales tax would need to go to at least 13.5%. At least, that's what the articles I read two days ago said.

The proponents of this plan appear to have forgotten that there are certain taxes that by law piggy-back the state sales tax. For example, a 8.5% state sales tax rate becomes 9.5% in Walton County, due to the 1% local option surtax.

Worse yet (listen closely, rental owners) is that a visitor to our area will pay 8.5% + 1% + 4% = 13.5% tax to stay in a transient rental accommodation. Currently, there are a couple of other areas in the state in which the total is 14 to 15%, and their tourism doesn't appear to be hurting, but I am not certain how well 13.5% would set with our visitors. Now...if the base state sales tax goes to 13.5%, the total lodging taxes go to 18.5% . Folks will still come, but I foresee shorter stays...and over time, total revenues will decrease. Also, there would definitely be an impetus for less-than-honest rental managers to circumvent the tax (it happens too frequently as it is!)

Florida will be known as the state that shot the golden goose. And once you do something as drastic as this, you can't undo it.

 

[TheSheep]

Ah, yes, another regressive tax, fairness and equality for none.

 

[Joefromseagrove]

Believe it or not, there are actually working class people in Florida. Since Floridians spend on average 40% of their income on taxable items. Equal to about 2500 dollars per household, an increase on the sales tax impacts these people. Perhaps a low-income sales tax credit could level the field a bit.