Property taxes vital in Florida
After federal transfers, Florida’s largest source of per capita revenue is property taxes, according to the Urban Institute. The state has no personal income taxes and its tax code is considered the most regressive in the nation. Currently, property taxes contribute about $50 billion a year to the state's budget.
If property taxes were eliminated, local governments could face a massive revenue loss. According to the Florida Policy Institute, Florida’s property taxes make up 18% of county revenue, 17% of municipal revenue, and 50%-60% of school district revenue.
These funds help pay for vital services like fire and police services, education, and safety net programs, and without them, local governments would need to find alternative ways to cover those costs.
So how would the loss of funds be made up?
“If policymakers were to eliminate property taxes and replace them with higher consumption taxes (i.e., sales taxes), they would have to double the state’s general sales tax rate. Doing so would generate roughly $40.2 billion in the unlikely case that consumer demand remains constant,” said the Florida Policy Institute. The state’s general sales tax is currently 6%.
Replacing property taxes with higher sales taxes could worsen Florida’s already regressive tax system. Right now, lower-income households bear a larger share of the tax burden, and increasing the sales tax could make matters worse by taking a bigger chunk out of their budgets. On the other hand, wealthier residents tend to spend a smaller percentage of their income on taxable goods, meaning they’d feel less of an impact.
Nearly seven in 10 Florida voters would prefer keeping property taxes the way they are over a sales tax increase to 12%, according to a poll.
While the idea of property tax relief sounds appealing, the trade-offs are significant.
Can there be tax relief for residents while making sure the state has enough funds to support vital public services? The debate is just getting started, and the outcome will shape Florida's fiscal future.
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