This weekend I read a very interesting and insightful article on
Tax Reform that I wanted to share with you...I have been fortunate
to have spoken with Mr. Weaver in the past year as we have both
been active in the statewide effort on Tax Reform...Here is the
article...I would be interested in your comments.
As Published in the Tampa Tribune on 4/20/08
With several new tax reforms in place and number of other changes
being debated in Tallahassee, The Tribune posed four questions to
Ron Weaver, a veteran land-use lawyer in Tampa who has followed the
tax reform debate carefully.
1. Why is additional tax reform necessary?
Real tax reform was one of the top issues when
Charlie Crist ran for governor. The tax changes voters approved on
the Jan. 29 ballot were a small beginning.
Remember, the Taxation and Budget Reform Commission
only meets once every 20 years. We ought to take the opportunity to
get something on the ballot that benefits everyone.
People want lower taxes and also more equity. One
neighbor says, 'Hey, my tax bill was eight grand and it went up
$250. His neighbor in a similar house says, 'Mine was two grand
and it went up $60.' There is an unhealthy tension between
those who have been here awhile and those who came recently to our
fine state. We must close at least half of that gap fairly to all
over time.
Commercial property has been of equal concern. The
recent capping of increases of nonhomestead taxable value at 10 per
cent, which is a change voters approved on the Jan. 29 ballot, was
very little or no relief. Property values had only been going up 4
to 9 percent a year. Proposals before the Taxation and Budget
Reform Commission include a 5 percent cap which we must implement
to be fair to the commercial community, and to the renter.
Tax reform needs to reconcile how we treat
newcomers and commercial property. And we need to become more
efficient as we assure fairness for all, including government's
urgent needs like fire, police, education and transportation.
There's more fat in the bureaucracy, and they're finding
it.
2. What reforms make the most sense to you?
We should look at four or five other solutions. We
should not place all the burden on one group.
A one-cent sales tax is needed. One-half cent to
finish the timid start of true property tax relief. The other
quarter cent for communities that need transit, and a quarter cent
for education that might suffer in some of the changes. This new
balance even includes tourists in the solution, as they pay 25 to
30 percent of sales taxes.
Some of the sales tax exemptions like for ostrich
feed, charter fishing and sky boxes need to be removed in this new
fairness.
A half cent of the sales tax could go for property
tax relief, a quarter should go to education, and a quarter to
local needs, including transportation. That quarter should be used
smartly where transit is not needed. It could be used for economic
development in depressed areas that desperately need jobs, such as
counties suffering the effects of hurricanes and canker.
The rollback in taxes approved by the Legislature
last year included local government in the reform. Fat that can be
cut should continue to be found. The tax amendment approved in
January by 64 percent of Floridians created some portability for
the Save Our Homes tax cap, which had a little, minor positive
effect on lagging residential sales.
Eventually newcomers, renters and commercial owners
should get at least half the benefits of Save Our Homes.
We don't want a services tax. It's not the
right way to tax, to drive services out of state.
We need to keep focused on simple solutions and use
opportunities like this 20-year window for this commission.
3. Do you think the new law allowing a homeowner to
transfer the Save Our Homes cap to a new property will withstand
constitutional challenges?
It may be bad tax policy and it is dividing the
state in unhealthy ways, but it is not unconstitutional. Here's
what a judge might say.
Save Our Homes (a 3 percent cap on annual increases
in the taxable value of a homestead) promotes a vital public
interest by supporting primary and permanent home ownership and
upkeep. Nonresidents owning residential property are treated the
same as Florida residents without the homestead exemption, and the
same as anyone owning a second home.
Like properties used for the same purpose are
treated the same.
To someone from Illinois who owns a second home
here, a judge might say, 'What do you enjoy back in Illinois? A
big tax break. If you want to move down here, you'll see the
Save Our Homes benefit in a few years. The people already here who
sustained Florida are saving more.' 4. Will real estate rebound
soon?
Portability and other minor tax reforms of the
people and their Legislature's own making have helped the
housing market a little bit. But it's a very, very sad
residential real estate market, and getting sad for virtually all
other real estate except apartments and industrial, for obvious
reasons.
A lot of sellers have been reluctant to admit there
is a problem. In two or four months we will hit the bottom when the
income levels rise a little or stay flat and housing prices come
down 5 to 10 more percent to meet them. We have to absorb a
two-year supply.
Ron Weaver, of Stearns, Weaver, Miller, Weissler,
Alhadeff and Sitterson, has practiced land-use law for 30 years and
has both a personal and professional interest in tax reform.
