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Scott Maxwell: As Florida cuts corporate taxes, your tax burden rises ... and schools, mental health, roads suffer
Orlando Sentinel - 11/15/2019
Nov. 15--The Florida Department of Revenue claims the following:
"The Florida corporate income/franchise tax is imposed on all corporations for the privilege of conducting business, deriving income, or existing within Florida."
That is a lie.
It is not imposed on "all corporations."
It isn't even imposed on most.
Only around 1% of Florida businesses pay any corporate taxes at all.
And among those that do, some of the biggest rely on crafty lobbyists, creative lawyers and pliable politicians to whittle their tax bills down even more ... often to nearly nothing.
This is the rarely told story being spelled out in meticulous detail in the Sentinel's in-depth series on corporate tax-dodging, "Big Profits, Tiny Taxes" by Jason Garcia.
Maybe you think you don't care. Maybe you think: Bully for the big companies for sticking it to the state.
Except here's the thing: You are the state. And when businesses' tax burdens go down, yours goes up. It's basic math.
See, the state budget is one big pie. And If companies can use loopholes or politicians to make their payment piece smaller, your share of the pie gets larger.
You can see the evidence all around you.
Yes, Florida has one of the lowest corporate tax burdens in America.
But it also has above-average state sales taxes, some of the highest gas taxes and the highest number of toll roads in America.
Think about those last two facts for a moment. You pay more in taxes to fill up your car than most motorists in America. Yet you're also asked to pay to drive on more roads (which gas taxes are supposed to fund) than residents anywhere else.
See, someone always has to pay.
For roads. For schools, courts, parks and more.
And in Florida -- more than most states -- individual taxpayers bear that burden.
Once, when the state was running out of ways to tax and toll residents, it proposed adding higher-tolled "express lanes" in the middle of already-tolled roads. Seminole County Commissioner Bob Dallari said then: "They talk in Tallahassee about reducing taxes, but they're just pushing the bills down here."
Dallari was exactly right. And it's not just tolls.
In 2009 -- just a few years after the Legislature cut corporate taxes -- legislators more than doubled your cost for renewing a driver's license and for registering a new car.
The jacked up the price for entering state parks, getting a fishing license, filing civil lawsuits and on and on -- more than a billion dollars in new fees for you in a single year.
But yeah, corporate tax rates are low.
As the Sentinel series showed, a company like EBay is supposed to pay $1.8 million in state taxes but whittles its bill down to 1% of that.
Vaccine manufacturer Sanofi Pasteur Inc. made $55 million and paid nothing.
How often were you able to do that with your property taxes? Or sales taxes? Or gas taxes? Or tolls? Never.
Again, none of the tax-dodgers featured in the Sentinel series are small businesses. Most small business aren't being taxed in the first place. These are the big guys.
As a result of low collection rate of corporate taxes, Florida relies more on taxes that are far more regressive.
Families that make less than $50,000 a year pay between 8.1% and 12.7% of their income in local and state taxes, according to the Institute on Taxation and Economic Policy, while families that make $200,000 or more pay between 2.3% and 4.5%.
And you know who tells you this structure is a great idea? Those who pay the least.
One of the most-parroted talking points is that "Corporations don't pay taxes. People pay taxes."
Nonsense. Of course corporations pay taxes. If they don't pay taxes, they don't pay salaries or anything else either. But again, they do.
Another talking point is: "All corporate taxes and tax breaks are passed directly to consumers anyway."
There's absolutely no requirement for companies to pass along tax savings to their customers. Often, they do not. They can use it for stock buyback programs. They can put it in reserves or hand it out as bonuses to top executives.
Years ago, when SeaWorld was in flusher times, the park actually bragged about avoiding taxes completely even as it hiked up admission prices. People who argue consumers always benefit from corporate tax breaks hope you don't know the facts.
There's another obvious drawback for any state that lets corporations skate on taxes ... it has less money to fund the services citizens need.
Schools. Mental health. Pre-K. Florida ranks near the bottom of America for all these things.
But yeah, we have low corporate taxes.
Some of the legislators who do these corporations' bidding don't even seem to understand what they're doing.
When Garcia asked state Sen. Kelli Stargel about $500 million in corporate tax breaks approved by the Legislature, Stargel admitted she didn't know the bill -- that she sponsored -- awarded refunds and then offered as her excuse: "I'm not a tax expert."
She chaired the Senate'sFinance & Tax Committee.
These people may not know what they're doing. Or maybe they don't care.
But just remember: Someone always pays. And usually, it's you.
(c)2019 The Orlando Sentinel (Orlando, Fla.)
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