The Florida House just unveiled a giant package of tax cuts – and it’s actually pretty good
There are narrow breaks for companies like Florida Power & Light but also big, broad breaks that could help lots of people
This is Seeking Rents, a newsletter 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.
The Republican-controlled Florida House of Representatives just unveiled a major package of proposed tax cuts – and it’s actually pretty good.
To be sure, there are number of breaks for influential special interests. One provision would save Florida Power & Light an estimated $2.3 million over the next few years as it builds a $65 million “green hydrogen” plant in Okeechobee County. Another is expected save Atlantic Sapphire, a Miami salmon-farming company, several million dollars a year in property taxes. A third would create a new tax break for tickets to Formula One Grand Prix races – a perk sought by the billionaire owner of the Miami Dolphins and Hard Rock Stadium.
But the sweeping, 68-page proposal also includes several broad and long-lasting sales-tax breaks that could directly impact everyday Floridians. For instance, it would eliminate sales tax for one year on children’s diapers and on clothing for babies and toddlers; for six months on energy-efficient refrigerators, washing machines and water heaters; and for three months on children’s books. The package would also permanently cut sales tax in half on the sale of new mobile homes (though not used mobile homes) and expand a tax-credit program that supports Habitat for Humanity.
And the House plan consciously avoids the enormous corporate tax breaks that are currently advancing through the Florida Senate. Less than 1 percent of all Florida businesses pay corporate income tax, which means that corporate tax cuts save nothing for more than 99 percent of companies. The savings flow entirely to a small circle of very large, very profitable corporations – corporations that already got a huge permanent tax cut from the federal government in 2017 and huge temporary tax cuts from the Florida Legislature in 2018 and 2019.
Of course, there are more than three weeks remaining in session, so there’s still a long way to go before any of this is finalized. Last year, for instance, a last-minute tax break was tucked into the tax package for Full Sail University, a for-profit school in Orlando owned by major campaign contributors. Three years ago, lawmakers waited until the final week of session to act on a tax break for the Walt Disney Co. – and then until the final night of session to act on a tax break for Crown Castle International Corp., one of the country’s largest owners of cell towers.
Lobbyists for everyone from Lockheed Martin Corp. to United Rentals Inc. are chasing breaks this session; heck, the House Ways & Means Committee, which will consider this proposed tax package tomorrow, is going to hear a nearly $200 million-a-year tax break for the timeshare industry at the same meeting (backstory here and here). It’s a good bet that legislative leaders are quietly sitting on something else that won’t show up publicly until there’s not enough time left to scrutinize it.
But that’s an outrage for another day. For now, here’s a walkthrough of the first tax package of the 2022 session.
The big sales-tax breaks
If you count tax holidays (although analysts on both the left and the right say you shouldn’t), the House’s proposed tax package includes more than half a dozen broad-based cuts to Florida’s sales tax, a tax that hits low- and middle-income Floridians especially hard.
Permanently reducing the tax charged on the sale of new mobile homes (but not the sale of used ones) from 6 percent to 3 percent
Suspending, for two years, tax on the retail sale of impact-resistant windows, doors and garage doors. This is a potential boon for PGT Innovations Inc., a nearly $1 billion-a-year manufacturer of hurricane-strength windows and doors based near Sarasota. PGT, which entered the direct-to-consumer market in 2020, has been lobbying lawmakers for several years to suspend sales taxes on impact-resistant windows and doors. It’s also donated more than $50,000 to Florida Gov. Ron DeSantis in the past year.
Suspending, for one year, tax on the sale of children’s diapers and clothing for babies and toddlers
Suspending, for six months, tax on the sale of residential Energy Star-rated appliances, including washers and dryers, refrigerators and water heaters.
Suspending, for three months, tax on the sale of books intended for children ages 12 or younger. This would be timed to correspond when kids are out of school for the summer, with the tax suspended from May 14 through Aug. 14
A two-week “back-to-school” tax holiday (July 25 through Aug. 7) on clothing, school supplies and computers. This is something the Legislature does every year, although this plan would extend it to cover jigsaw puzzles and other learning aids and educational toys.
A three-week “disaster-preparedness” tax holiday (May 28 through June 20) on hurricane supplies. This has become another annual tradition in Florida, though this version would expand to include smoke detectors, fire extinguishers and carbon monoxide detectors, as well as “supplies necessary for the evacuation of household pets’ – including carriers, leashes, food and litter.
A one-week “Freedom Week” tax holiday (July 1 through July 7), on things like tickets to concerts, plays, sporting events and movie theaters, gym memberships and boating, fishing and outdoor sports equipment. The Legislature first tried this last year, framing it as an attempt to stimulate recreational spending amid the COVID-19 pandemic. Interesting note: The House plan would expand this to include home swimming pool and spa supplies, including replacement parts, filters and chemicals.
A new, one-week “tools used by skilled trade workers” holiday (Sept. 3 through Sept. 9), on things like hand tools, power tools, boots, work gloves, toolboxes and industry textbooks.
The politically popular constituencies
The package also includes a bunch of tax breaks that are much narrower but still broadly popular – most of them would probably pass unanimously if there was a separate vote on each. Among them:
Expanded property tax breaks for widows and widowers and people who are blind or have other disabilities, and for active members of the military who are deployed on mission
New property tax breaks for owners of homes rendered uninhabitable by hurricanes or other catastrophic events and for condo owners in towers destroyed by “sudden and unforeseen collapse” – a response to the collapse of the Champlain Towers South building last year in Surfside.
An extra $10 million a year for a pair of tax-credit programs designed to steer donations to charities: $5 million for the long-running “Community Contributions” program, which supports housing development charities such as Habitat for Humanity, and $5 million for the year-old “Strong Families” program, which supports nonprofits that provide child services. There’s also a slight expansion for a third tax-credit program supporting the New Worlds Initiative, a book-delivery service for children and a cause championed by Republican House Speaker Chris Sprowls.
A permanent exemption ensuring that a state tax on mortgages, bank notes and other loans won’t ever apply to federal emergency-relief loans. This was an issue that popped up during the COVID-19 pandemic, when the federal government established programs like the “Paycheck Protection Program,” which gave forgivable loans to small businesses (and some big ones).
The special-interest smorgasbord
And then there are narrower business tax breaks that are usually far less popular – and which get buried inside big packages like this in order to make it politically difficult to vote against them.
A $7.5 million-a-year-property tax break where the vast majority of the savings are expected to go to one company: Atlantic Sapphire, which has opened a big salmon-farming operation south of Miami. Emails show that a lobbyist for Atlantic Sapphire has helped write the tax break, which would work by forcing property appraisers to ignore the value of the company’s multimillion-dollar tanks, pumps, filtration systems and other equipment when assessing its property for tax purposes.
A roughly $300,000-a-year sales-tax break for machinery and equipment used in the production of “green hydrogen” – a type of hydrogen produced with energy from renewable sources. Almost all of the projected savings, at least in the early years, are expected to go to utility giant Florida Power & Light, which is building a $65 million green hydrogen facility in Okeechobee County. It’s the only known green hydrogen facility in Florida.
Permanently eliminating sales tax on the sale of tickets to Formula One Grand Prix races, which could provide a nice boost to Steve Ross, the owner of the Miami Dolphins and Hard Rock Stadium, which signed a 10-year-deal last year for a Formula One Grand Prix race. It’s worth noting that Ross’ lobbyists, who tried pitching this tax break two years ago, said then that it would help incentivize Formula One to make a long-term commitment to Miami race – which appears to have happened even without the tax break. When state economists studied the idea that year, they estimated the tax break would cost between $1.5 million and $2 million every time a Grand Prix race is held in Florida.
A new corporate tax break for railroads that spend money building, replacing and maintaining tracks, signals, switches and other infrastructure. The tax break would only be available to “Class II” and “Class III” railroads – so Jacksonville-based rail giant CSX Corp., a Class I railroad, is out. But the tax break could potentially help Florida East Coast Railway, a Class II railroad that is now owned by Mexican-based Grupo México Transportes and operates 351 miles of track across Florida, and RailUSA LLC, the Boca Raton-based parent company of the Class II Florida Gulf & Atlantic Railroad (Sidenote: The House’s proposed budget also includes a $435,000 earmark for Florida Gulf & Atlantic Railroad to expand capacity along 26 miles of track in the Panhandle to accommodate increased shipments of rock for roadwork and other infrastructure projects.)
About those corporate taxes
There’s a case to be made that the most significant provision in the entire 68-page bill is a one-word change on page 42.
That’s where the legislation would have Florida’s corporate tax code “piggyback” on to the latest version of the federal corporate tax code.
Normally, this is a routine procedural thing that hardly warrants a mention. But piggybacking has become one of the most heavily lobbied issues in Tallahassee ever since former President Trump signed the Tax Cuts and Jobs Act in December 2017.
The TCJA gave corporations one of the biggest federal income tax cuts in American history. But it also made changes that – because of the way state corporate taxes link to the federal corporate tax – forced corporations to give a small portion of their savings back in the form of higher state income taxes.
The TCJA was still a giant net tax cut for corporations, because federal taxes are so much larger than state taxes. But corporate lobbyists have nonetheless been lobbying furiously in state capitals around the country, trying to persuade legislatures to “decouple” from key TCJA changes that cause higher state tax bills.
Florida has already granted some of the corporate lobby’s wishes: The state permanently decoupled in 2019 from one major change in the TCJA, which is now saving corporations something like $100 million a year, according to an early estimate. And the Legislature has given corporations another $3.6 billion in temporary tax cuts over the past few years to compensate for the effects of the TCJA. (For context: that’s about 20 years’ worth of affordable housing spending.)
Big corporations are, of course, lobbying for even more. But by piggybacking without any other additional changes, the Florida House of Representatives is not giving it to them – at least not yet.