Discover more from Seeking Rents
In his first term as governor, Ron DeSantis raised taxes on Floridians by more than $1 billion
An analysis of Florida Gov. Ron DeSantis' record during his first four years in office shows that he has cut taxes for businesses — but raised taxes on consumers
This is Seeking Rents, a newsletter and podcast devoted to producing original journalism — and lifting up the journalism of others — that examines the many ways that businesses influence public policy across Florida, written by Jason Garcia. Seeking Rents is free to all. But please consider a voluntary paid subscription, if you can, to help support our work.
In his first term as Florida governor, Ron DeSantis has raised taxes on Floridians by more than $1.5 billion, according to a new Seeking Rents analysis of his record over the past four years.
The Republican governor — and aspiring GOP presidential contender — has cut taxes by more than $4 billion overall, the analysis shows.
But that’s because DeSantis has cut taxes for businesses by approximately $5.7 billion. That more than offsets the roughly $1.5 billion in higher taxes DeSantis has imposed on Florida consumers.
This analysis is based on the combined and cumulative effects of the six major pieces of tax legislation that DeSantis signed during his first term. The six bills included four omnibus “tax packages” that contained dozens of different tax breaks for both business and consumers; a corporate tax cut for the top 1 percent of businesses; and an unprecedented tax shift that forced Floridians to pay more sales taxes when shopping online — and then used that new money to cut a pair of taxes paid only by businesses.
I’m going to walk you through the full methodology in a moment, complete with links to all the original sources for these numbers. But first let me tell you what DeSantis has to say about this.
A word from the governor
In a written statement, the governor’s office called this analysis “flawed and incomplete.”
Their claim rests entirely on one point: Whether you think the bill DeSantis signed that made Floridians pay more sales taxes when shopping online was actually a tax increase. So let’s address that right away, and then you can decide for yourself.
The online sales-tax changes were included in a piece of legislation known as Senate Bill 50, which DeSantis signed at 11:01 p.m. on April 19, 2021.
This was mostly about Amazon. Technically, the legislation dealt with any online marketplace that lists products sold by other sellers, including popular platforms like eBay and Etsy. But Amazon — where third-party sales now account for more than half of everything sold on the site — is the biggest online marketplace by far.
Before Senate Bill 50, if you bought something on Amazon’s marketplace, Amazon did not collect any sales tax from you.
Instead, the state of Florida expected you to contact the Florida Department of Revenue and pay the tax yourself. (This was based on a little-known corollary to the sales tax: The “use tax,” which was originally written back in the days people regularly bought stuff through mail-order catalogues.)
But almost nobody actually paid this tax. Most Floridians had no idea they were even supposed to. Compliance was “notoriously low,” according to analysts in the Florida Senate.
What’s more, this law was basically impossible to enforce in a state of more than 20 million people, many of whom make dozens or hundreds of Internet purchases each year.
Senate Bill 50 rewrote the rules for these kinds of Internet purchases. This new law said that Amazon itself had to start charging sales tax on its marketplace sales and then turn that money over to the state. And that’s something the state can easily enforce, since there are only a few really big online marketplaces to monitor.
So now Amazon charges you sales tax when you buy something on its marketplace. And Florida shoppers are collectively paying more than $1 billion a year in extra sales taxes.
But Ron DeSantis says that’s not a tax increase.
“The bill did not create a new tax because the tax obligation already existed on the consumer to remit payment to the state for online sales tax,” the governor’s office said in its statement. “SB 50 simplified the collection process for this pre-existing sales tax responsibility by transferring that collection role to the seller, as is the case with any brick-and-mortar business in Florida. Because of this simplification, the state will collect more tax revenue — but not because a new tax was created.”
I would argue SB 50 was a tax increase because it, you know, increased taxes.
But like I said, this is one you can decide for yourself.
The Ron DeSantis record on taxes
Okay, now let’s move on to the analysis itself. Like I said earlier, DeSantis has signed six major pieces of tax legislation as governor.
HB 7123 (2019): This was a $326 million package of various tax breaks for both businesses and consumers. The biggest components included permanently reducing the tax businesses pay when they lease property (nicknamed the “business rent tax”) from 5.7 percent to 5.5 percent; a five-day sales-tax holiday on back-to-school supplies; and a seven-day sales-tax holiday on hurricane supplies. (It also included tax breaks for Disney and a big cell-tower company.)
HB 7127 (2019): This was a $2.8 billion tax cut for corporations only. This bill temporarily reduced the state’s corporate income tax from 5.5 percent to 4.458 percent for 2020 and then to 3.535 percent for 2021. It also gave big tax refunds to corporations, which the DeSantis administration handed out earlier this year.
HB 7097 (2020): This was a $47 million package of various tax breaks, mostly for consumers. The main components were a three-day sales-tax holiday on back-to-school supplies and a seven-day sales-tax holiday on hurricane supplies.
SB 50 (2021): This was the multibillion-dollar tax shift off of business and on to consumers. We already discussed the online sales tax part of the bill, which has so far cost Floridians roughly $2.6 billion in higher tax payments. But SB 50 also temporarily reduced a tax that businesses pay to fund unemployment benefits for laid-off workers. And it permanently reduced the business rent tax from 5.5 percent to 2 percent. Those changes have so far saved businesses roughly $2.6 billion in lower tax payments.
HB 7061 (2021): This was a $206 million package of tax breaks for both consumers and businesses. It included a 10-day sales-tax holiday on back-to-school supplies, a seven-day “Freedom Week” sales-tax holiday on things like camping, beach and sports equipment and on tickets to live events; a 10-day sales-tax holiday on hurricane supplies; and a property-tax exemption for affordable housing developers. (It also included a tax break for the owners of Full Sail University, a for-profit school owned by big political donors.)
HB 7071 (2022): This was an $818 million package of tax breaks, mostly for consumers. There was a lot in this one, including: A two-year sales-tax exemption on impact-resistant windows and doors; one-year sales-tax exemptions for baby diapers, baby and toddler clothes, and energy-efficient appliances; a three-month sales-tax exemption on children’s books; plus sales-tax holidays for back-to-school supplies (14 days), Freedom Week activities (7 days), hurricane supplies (14 days), and workers’ tools (7 days). It also included a one-month gas-tax holiday...but not until October. (It also included tax breaks for Florida Power & Light and the owners of the Miami Dolphins and NASCAR.)
Now, DeSantis and Florida’s Republican-controlled Legislature have enacted dozens of other laws that also raised or lowered certain taxes and fees during his first term. For instance, they extended a $3 fee that gets tacked on to traffic tickets and was supposed to expire last year. They also added rental-car taxes to car-sharing apps like Zipcar and Turo. Those two changes have generated a combined $37 million in extra revenue for the state so far.
But all these other bills are so small in comparison to the six big tax bills that they don’t affect the analysis at all. It would be an exaggeration even to call them rounding errors.
Where did you get your numbers?
At the end of every legislative session, a group of nonpartisan state economists — the same people that DeSantis and the Legislature rely on when writing the state budget — produce a report detailing the financial impact of every provision in every bill that passed that year.
For every single provision, these economists estimate how much cash the state will lose (if it’s a tax break) or gain (if it’s a tax increase) over each of the next five years.
For my analysis, I added up the annual cash impacts of every provision in those six big tax bills for each of the four budget years that DeSantis has presided over as governor: Fiscal years 2019-20, 2020-21, 2021-22 and 2022-23. (The state’s fiscal year begins on July 1.)
If you’d like to check the numbers yourself, you can find each of the official post-session financial-impact reports here. State economists did a separate analysis for the provisions of HB 7127 (the big corporate tax cut), which you can find here.
I then categorized each provision based on whether it affected a consumer tax or a business tax, and then added up the totals for each category. The final result looks something like this:
In most cases, categorizing each tax break or tax increase is pretty straightforward: Only businesses pay the business rent tax, for instance. Only businesses pay the corporate income tax.
But that brings us to the one important caveat in all this.
A bit of fine print
Florida’s sales tax is primarily a tax on consumers. But it’s not entirely paid by consumers. Businesses pay some sales tax, too. (For instance, the “business rent tax” is just a name that businesses lobbyists invented as part of their campaign to get rid of it; it’s actually just sales tax charged on commercial lease payments.)
And Florida’s sales tax is not just paid by Floridians, either. Tourists pay some of it, too.
Altogether, state economists estimate that Florida households pay a little over 60 percent of the sales tax. Businesses pay 25 percent. And tourists pay 15 percent.
For my analysis, I assumed that Florida households are paying 100 percent of the increased taxes that come from making Amazon and other online marketplaces charge sales tax. That’s roughly $1.4 billion a year in extra taxes paid by Floridians.
But if you wanted to be as conservative as possible, you could instead assume that Floridians are paying just 60 percent of those taxes. That would work out to roughly $860 million a year in extra taxes paid by Floridians.
Even if you substituted the lower number into the overall analysis, you would still find that DeSantis has raised taxes on Floridians. But the net increase, after factoring in all the other tax cuts he’s signed, would be smaller.
Under this more conservative assumption, DeSantis has raised taxes on Floridians by $500 million (rather than $1.5 billion).
It’s impossible to know exactly how much of this tax increase is being paid by Floridians. But it’s almost certainly closer to 100 percent than 60 percent.
That’s because SB 50 only increased sales taxes on stuff that people buy on Amazon and other online marketplaces. So it has no impact on the business rent tax, which is a big part of businesses’ share of the sales tax. And it likely has a minimal impact on tourists, who presumably do most of their Internet shopping at home.
But most businesses are small businesses — places with no more than a handful of employees. And lots of those small businesses are probably buying stuff on Amazon. So they got hit with this tax increase, too.
Big Business saved the most
And that brings us to another important point about Ron DeSantis’ record on taxes: While the governor has cut taxes for businesses by more than $5 billion, most of those savings have gone to the very biggest businesses in the state.
For instance, nearly half of all the governor’s business tax cuts came from the giant corporate-income tax cut imposed by HB 7127.
Ninety-nine percent of business in Florida don’t pay any corporate income tax at all. That means only 1 percent of businesses save any money when the corporate income tax is cut.
In fact, roughly half of all savings from corporate income tax cuts go to just 100 giant corporations. We don’t know exactly who these companies are because Florida keeps corporate tax payments secret. But they are all likely to be the big publicly traded behemoths — companies such as Walt Disney Co., HCA Healthcare Inc. and NextEra Energy Inc. (the parent company of Florida Power & Light).
And this analysis also significantly understates how much money Ron DeSantis has saved these corporate goliaths.
For instance, in addition to cutting the corporate tax rate and sending out corporate tax refunds, HB 7127 also included a third big tax break for corporations. Under that provision, the state of Florida opted not to link up with a new federal law that imposes taxes on profits that corporations have shifted into overseas subsidiaries through accounting gimmicks. (This federal law is known by the acronym “GILTI,” in case you want to impress people at parties.)
Staffers at the Florida Department of Revenue estimated at the time that “decoupling” from GILTI could save corporations more than $100 million a year in Florida corporate taxes. But the panel of state economists that formally “scores” legislation never felt confident enough to put an official estimate on it. So the GILTI tax break is not included in this analysis of DeSantis’ record on taxes.
In addition, in 2018, former Florida Gov. Rick Scott signed another giant corporate income tax cut: HB 7093. That bill included $543 million in tax refunds for corporations that were paid out in the spring of 2020, after DeSantis had become governor.
Because of the COVID-19 pandemic, DeSantis had declared a state of emergency — which gives the governor the power to suspend certain state laws. So DeSantis could have stopped those refunds, if he’d wanted to. But he chose to let them go out, because, his office said at the time, corporations were expecting the money.
But because that particular piece of legislation was signed by Scott, those refunds aren’t included in this analysis, either.
And lastly, earlier this year, the state waived penalties for thousands of corporations who flouted a state law — signed by DeSantis — that was supposed to make them reveal more details about their corporate taxes. This was an enormous savings for corporations that broke the law.
In fact, it saved them somewhere between $168 million and $255 million, according to a separate Seeking Rents analysis. But because that’s not an official estimate, none of those savings for law-breaking corporations are included in this analysis of DeSantis’ record.
Correction: An earlier version of of this story misstated the tax savings from HB 7127, the governor’s 2021 corporate tax cut. Those savings totaled approximately $2.8 billion (not $2.7 billion). The story and graphics have been updated to reflect the change.