Thoughtful tax reform? No, political chicken

Article Courtesy of The Palm Beach Post

Palm Beach Post Editorial

Published October 30, 2007


Property-tax reform in Florida came down to one day and one reality: The Senate's way or no way.

Last week, the Senate refused to consider a House proposal that gave more to more taxpayers. Monday morning, the Senate approved its plan and went home, making clear that Senate leaders would rather place nothing on the Jan. 29 ballot than let the House dictate changes.

Monday afternoon, House members complained that they didn't have enough time, that the numbers weren't final and that the numbers they saw were wrong. They didn't know how the Senate arrived at the numbers. They asked for reconsideration of their ideas.

But the Senate had set the agenda. Senators gushed over their plan because it follows Gov. Crist's philosophy: It keeps things simple. The plan has four points:

1) It doubles the $25,000 homestead exemption, rejecting a House plan that would have spread resulting tax cuts more fairly. 2) It allows portability, the one thing House members couldn't go home without, since it allows people to take their Save Our Homes benefit when they move. 3) It reduces the intangibles tax on business, something both chambers support. 4) It caps non-homestead taxable property value at 10 percent annually, a cap so high that snowbirds, business owners and landlords would benefit only if there's another housing bubble.

Simplicity is also one of the Senate plan's great disadvantages. If the Legislature has proven anything in its regular session and two special sessions this year on property-tax reform, it's that the issues are not simple. Legislators are talking blithely of changes to the state constitution, without enough outside analysis, even though the changes will be nearly irrevocable if voters accept them on Jan. 29.

Also, in the name of simplicity, the Senate stripped the House measure of several important features. Gone is a discount for first-time homeowners, a change meant to reignite a stalled real-estate market. Gone are valuation limits on working waterfronts, meant to assure fairness in treating the rapidly rising values of waterfront properties. Even the politically popular effort to eliminate property taxes for low-income seniors didn't get a place on the Senate's simplicity express.

Education fares worse in the Senate proposal. The increase in the homestead exemption would not have applied to local schools in the House plan but it does in the Senate. One estimate puts the cost over five years at $859 million.

House members spent hours criticizing the Senate. Then they voted to accept everything the Senate approved. Faced with Deal or No Deal, they took the deal. It was a terrible way to make tax policy.