Transcript: Seeking Rents — The Podcast (Ep. 1)

This is a transcript of Episode 1 of Seeking Rents — The Podcast

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.

This episode originally published July 14, 2022

Hello, and welcome to Seeking Rents — The Podcast. I'm your host, Jason Garcia, the publisher of Seeking Rents. That's a newsletter that investigates the way businesses influence public policy in Florida.

That name, by the way, comes from a term in economics called rent-seeking. Rent-seeking refers to when a person or a business uses their political influence to manipulate the political process in order to make more money for themselves at the expense of everybody else.

This is episode number one — the first of what will no doubt be thousands of episodes. In fact, if you are listening now, you are basically the person who read Game of Thrones long before HBO ever came along. You're also the sort of person that knows it's actually called A Song of Ice and Fire,they're actually called Others and Catelyn Stark isn't actually dead. Sort of.

Anyway, I'm excited for our first show. We're gonna kick this podcast off with an important story about how Florida Governor Ron DeSantis and a bunch of business lobbyists worked together to pull off one of the biggest reverse Robin Hoods in the history of Florida.

They took money from you and they gave it to businesses. I'll tell you how they did it and why you didn't notice. But first, normally I might start off with a discussion of an important story or two in Florida politics from the past few days. But since this is our very first show, I'd like to take a moment to tell you a bit more about who I am and what I do.

Like I said earlier, my name is Jason Garcia, and I've been a journalist in Florida for 20 years now. I began my career with the Orlando Sentinel first as a political reporter and then as a business reporter. Then I went to Florida Trend magazine where I could be both. I came back to the Sentinel for a few years to be an investigative reporter, focusing on the intersection of business and politics, but I left the paper at the start of this year to launch Seeking Rents.

Over the years, I've carved out a bit of a niche covering corporate influence in state and local government, especially when it comes to tax policy and calling out special interest tax breaks and corporate tax loopholes. I'm sometimes asked about how I got interested in writing about taxes, which is, you know, just about the driest subject imaginable. But I can actually tell you the exact moment it happened.

It was during the 2006 session of the Florida Legislature. I'd recently moved to Tallahassee to work full time out of the Orlando Sentinel's capital bureau. It was only the second session I'd ever covered. And I still barely knew where the bathrooms were.

Anyway, one day I was sitting in a committee hearing in the Florida House of Representatives, waiting for the committee to take up some bill I'd been assigned to write a story about that day. I don't even remember the bill I was there for. I think maybe it had something to do with Orlando's giant convention center, but honestly, I can't recall at all.

But while I was waiting for whatever bill I was waiting for, the, the committee took up some random tax bill. Now, if you've ever read a piece of tax legislation — and if you have a tip of the cat to you, fellow nerd — but if you have, you know, it may as well be written in a foreign language. And if you don't speak that language, it may as well be written in gibberish. It is utterly indecipherable.

So I had no idea what I was looking at. And honestly, I really didn't care. But as I sat there listening to the committee, I learned that this sheet of gibberish in front of me was actually a tax break for a company called Valpak.

Some of you might remember Valpak. It used to mail out millions of blue envelopes stuff with random coupons and advertisements. I don't even know if it exists anymore. This was quite literally a tax break for junk mail. And I was watching in real time, as our elected state lawmakers were giving hundreds of thousands of dollars to a single company with a good lobbyist through the most opaque process imaginable.

Seriously, imagine the attention something like this would get if they just put a line in the state budget that said here's $300,000 for Valpak. That would never pass, even though it is functionally the exact same thing.

From that point on, I started teaching myself to speak this foreign language so that I could learn to spot these gross tax giveaways before they happened,explain them to others, and hopefully hold elected leaders accountable for supporting them. Two decades later, that's the seed of Seeking Rents, which began in January is a digital newsletter and now includes this podcast.

We'll probably play around with a format of the show as we go along, testing a few different ideas out along the way.While the style may change, the substance will always remain the same. We're going to tell you the stories in Florida politics that you should be paying attention to. The stories that an awful lot of elected leaders in Tallahassee would rather you ignore.

And that's probably the perfect way to segue into our first story. We've got a piece posting today on Seeking Rents the newsletter that I think might surprise some folks. During his four years as. Ron DeSantis, a conservative and allegedly anti-tax Republican, has raised taxes on Floridians.

Don't get me wrong. DeSantis has cut taxes deeply for businesses. Especially the state's very biggest businesses, the giant multinational corporations like Disney. But he has also raised taxes on Florida households. By a lot.

One reason you may not realize this is that DeSantis did a masterful job of hiding it. He used a deeply divisive social issue to stir up yet another culture war clash between voters on the left and the right and to divert the media's attention all to distract from the fact that he was also doing a favor for corporate lobbyists.

This happens quite a lot in Tallahassee, of course. But this was the most blatant example I've seen in my 20 plus years of covering this stuff. It was a lot worse than Valpak.

This all happened last year, but I think it's important to revisit it again now because Ron DeSantis is running for reelection now, and he's suddenly governing like a populist. Over the last few weeks,the governor has vetoed some really bad bills, including one for Florida Power & Light, another for Big Sugar and a third bill that would've helped a big pet store company that still sells puppies for profit. It's hard to believe that sort of thing still happens.

To be clear, Ron DeSantis deserves a lot of credit for vetoing those bills. And all the activists who organized and pressured him to veto those bills deserve a lot of credit too. Activism really does work, even in a place like Tallahassee.

But on the other hand, it's just as important to remember what Ron DeSantis does when he's not on the ballot. So let's dive in.

Let's start by going back in time to a little over one year ago.

It was the morning of April 19th, 2021, Florida. Governor Ron DeSantis staged press event in Winter Haven in Polk County, about halfway between Orlando and Tampa, two of the biggest media markets in the state. The event drew television news crews from both cities. And with those TV cameras rolling, the governor signed a piece of legislation known as House Bill 1.

You probably remember House Bill 1, because it got a lot of attention in late 2020 and early 2021. You probably know it as the anti riot bill or the anti protest bill. It threatened all sorts of new crimes and penalties for people engaged in the acts of civil disobedience, like a large rally that briefly blocks a road.

Versions of this anti protest bill had begun popping up in Republican-controlled state legislatures around the country in recent years, usually after progressive-led protests over things like the Keystone gas pipeline or the Trump administration's Muslim ban. But Ron DeSantis took up the idea following the police murder of George Floyd in Minneapolis, and the mass Black Lives Matter racial justice demonstrations that followed, across the country and around the world.

DeSantis' version of the bill was clearly designed to further inflame and exploit those racial divisions. One of the most notorious parts of this bill created new legal protections for people who harm protestors at rallies, like, say, someone who drives their car into a crowd of demonstrators standing in the street.

Not surprisingly, House Bill 1 was very popular with the Trump wing of today's Republican party, primarily the older white voters who are uneasy with, or even openly hostile towards, Black Lives Matter and other racial justice movements. Those are the same voters, of course, that DeSantis is trying to attract himself as he prepares to run for president possibly as soon as 2024. So he did everything he could to attract as much attention to House Bill 1 as possible.

Here’s DeSantis on Fox News, boasting about the bill only about 36 hours before he signed it:

[video clip of Fox News plays]

[Florida Gov. Ron DeSantis:] We were one of the states that said, ‘We’re not having riots in the state of Florida.’ So we put our foot down. We protected our folks. The bill I’m going to sign very soon is the strongest set of reforms in the country to even strengthen our hand more…I think it’s probably the most comprehensive piece of law-and-order legislation I’ve seen.

This is the same reason he staged that bill signing show for the TV cameras in Polk County. DeSantis wanted the brightest spotlight possible on the battle he was fighting with his current boogeyman of the moment.

So why was this so important? Because signing House Bill 1 wasn't the only thing Ron DeSantis did that day.

Late that night, at 11:01 PM to be exact, Ron DeSantis signed another piece of legislation, Senate Bill 50. You probably don't know nearly as much about Senate Bill 50 because Ron DeSantis doesn't talk about it. He didn't sign it in front of television cameras and he's never boasted about it on Fox News. The entire reason he waited until almost midnight to sign it was to make sure you wouldn't see any stories about it on the evening news or read any stories about it in the next day's newspapers.

But while you might not know about it, I guarantee you that Senate bill 50 has had a bigger impact on you than House Bill 1 has. That's because Senate Bill 50 was one of the biggest tax increases on Floridians in the history of the state.

If you bought something on Amazon recently, chances are you bought it on Amazon's marketplace. That's where Amazon sells products that are technically sold by a third party. These third party sales now account for more than half of all the stuff sold on Amazon.

And thanks to Senate Bill 50, every time you buy something on Amazon's marketplace, you are now paying Florida sales tax. It's not just Amazon. Senate, Bill 50 forced all online marketplaces to charge Florida sales tax whenever they sell to someone living in Florida. This includes eBay, Etsy and more.

This has generated an enormous amount of new tax revenue for Florida. More than $1 billion this year alone. That's billion with a B. That's according to estimates by professional and nonpartisan state economists. These are the very same people that Ron DeSantis and Republicans in the Florida Legislature rely on when they write the state budget. These people are experts, they're neutral, and you can trust them.

This is a giant tax increase. It amounts to nearly $60 a year for every man, woman and child in Florida. Okay, so here let me tell you what Ron DeSantis would say about all this. He would tell you that this wasn't really a tax increase at all.

Here's why: even before Senate Bill 50, you were technically supposed to pay sales tax on all that stuff you bought on Amazon. Each time you bought a book or a computer or a toaster or whatever it is, you were supposed to then alert the state department of revenue and pay the sales tax yourself. And you were supposed to do this each and every time you bought something.

But you didn't. Nobody did. And the state had no way to enforce something like this in a state of 20 million people where millions of people are buying dozens or even hundreds of things online each year. But Senate Bill 50 changed the law to make Amazon collect the tax from you, rather than relying on you to pay that tax yourself. And that's a tax the state can easily enforce.

So before Senate Bill 50, you weren't paying this tax. Now you are. And the state is suddenly collecting more than $1 billion a year in extra tax payments from you. You can decide for yourself if that's a tax increase.

So what did Ron DeSantis and the Florida legislature do with all this new money they were collecting from Floridians?

They gave it all to businesses. Literally. The very same bill that increased taxes on consumers by more than $1 billion a year also lowered taxes for businesses by more than $1 billion a year.

It did this in two ways. The first involves Florida's unemployment tax, which even by tax standards is a wickedly complicated subject. But basically that's a tax that businesses pay where the money gets put into an account that the state then uses to pay for unemployment benefits for Floridians who lose their jobs.

In good economic times, when there aren't many people who need unemployment and there's lots of money in that account, the unemployment tax is low. But in bad times, when lots of people are claiming unemployment benefits and the account starts to run low, the unemployment tax goes up.

This is what was supposed to happen after the COVID 19 pandemic. After so many companies made mass furloughs and layoffs, and there was a huge spike in unemployment, businesses, who, by the way, had been paying a very low unemployment tax for years, were supposed to pay higher unemployment taxes to replenish that unemployment account.

But instead of making businesses pay to refill that account, Senate Billl 50 used all the new cash that was coming in because Floridians were now being forced to pay sales tax when they shopped on Amazon.

Essentially, Ron DeSantis and the Florida Legislature made Florida consumers pay for a tax increase that businesses were supposed to pay.

Now that's only a temporary tax break for businesses because once the unemployment account is replenished that unemployment tax would've gone back down. But Senate Bill 50 also permanently cut another tax — and another tax that only businesses pay.

Specifically, Senate Bill 50 permanently reduced the tax that businesses pay when they lease property.Like when a law firm rents a floor in a downtown office tower or an Olive Garden restaurant leases land in a shopping plaza. This tax was cut by more than half, from 5.5 percent to 2 percent.

This tax cut will save businesses and only businesses more than $1 billion. One of the very biggest beneficiaries of this, by the way, is Publix the grocery store giant that turned a $4 billion profit last year.

So why would they do this? Why would Ron DeSantis decide to make Floridians pay billions of dollars more in taxes just so businesses could pay billions of dollars less. Because that's what corporate lobbyists wanted. In fact, emails show that lobbyists for a handful of giant retailers, particularly — Walmart, Target and Best Buy, plus Amazon itself — wrote the guts of what became Senate Bill 50. I know about those emails because I'm the guy who found them through a public records request back when I was working for the Orlando Sentinel.

Now, politicians in Tallahassee tried to make it look like they were trying to help homegrown Florida businesses when they passed this bill. It was an act.

One example: a few weeks before the legislature passed Senate Bill 50, it held a public workshop about the need for an online sales tax. The panelists included a representative from a family owned Florida based furniture company. Emails show that appearance was orchestrated by lobbyists representing Associated Industries of Florida, a front group for a few of Florida's very biggest businesses. Associated Industries, by the way, has given more than $2 million to Ron DeSantis since he was elected governor.

Like I said at the top, this was Robin Hood in reverse. And everybody knew it, though they pretended not to.

Democrats in the Florida House of Representatives tried to change this. One of the ideas they offered was to take all this new tax money that we were collecting from Floridians and spend that expanding affordable housing, instead of spending it all on more tax breaks for businesses, Republicans rejected this idea.

Then Democrats in the Florida Senate tried to change the bill to use all this new money to cut taxes for Floridians instead of businesses. But Senator Joe Gruters, who is also chairman of the Republican Party of Florida, instructed his fellow senators to reject that idea too, because, he said — and this is true — quote, "Businesses need the help the most."

[Florida Channel video of debate in the Florida Senate plays]

[Sen. Gary Farmer:] And so what this amendment does is, instead of taking that $1 billion that we project from the internet sales tax and giving it to the employers to reduce their contribution to the unemployment fund, instead we’re going to put this money in the sales tax column. And we’re going to do a cut of the sales tax, down to 5.75 percent from 6 percent. That is the amendment, Mr. President.

[Senate President Wilton Simpson:] Is there any debate on the amendment? Sen. Gruters, you’re recognized in debate.

[Sen. Joe Gruters]: Thank you, Mr. President. At a time when businesses need the help the most, it would be a bad idea to substitute what we have in place. And so I would say this is an unfriendly amendment.

[Simpson:] All in favor of the amendment say ‘yay.’ [Shouts of ‘Yay’] All opposed say ‘Nay.’ [Louder shouts of ‘No’] Show the amendment fails.

That's right. Publix needed the money more than you did. This seems like a good spot to note that Publix gave more than $1 million to Florida politicians and political groups last year.

It really is hard to overstate just how dramatically Senate Bill 50 shifted the tax burden in Florida off of businesses and onto Floridians.

But here's just one other way to think about it. In the four years that Ron DeSantis has been governor of Florida, he has cut taxes by more than $4 billion overall. That's a big number. But it's also a misleading one. Because it masks what Ron DeSantis has really done. Ron DeSantis has actually cut taxes for businesses by more than $5 billion. But he's raised taxes on Florida consumers by more than $1 billion.

No wonder he wanted to keep people talking about riots and protests.

You can learn a lot more about this on Seeking Rents, where we'll give you a full breakdown of just who DeSantis has cut taxes for and who he's raised them on. A word of warning: it gets even grosser. Because not only has Ron DeSantis cut taxes for businesses while raising taxes on consumers, most of those business tax cuts have gone to only a very small handful of giant corporations. Literally the top 1% of businesses. I'll include a link to the story in the show notes, but you can also find the newsletter at SeekingRentsFL.com.

All right, so that's gonna do it for our very first episode of Seeking Rents — The Podcast. Episode two will release next week. And we've got more shows already in the works.

In the coming weeks, Seeking Rents — The Podcast will delve into stories about corporations like grocery store chain Publix, mining and fertilizer company Mosaic, and electric utility Florida Power & Light. We'll tackle issues like the soaring cost of rent, the money funding political campaigns, and a Tallahassee tactic that I like to call ‘brand-laundering.’ We'll also hear from some interesting guests from time to time. And of course, there'll be lots more talk about tax breaks.

If you've got any story ideas or subjects you'd like to see us cover on a future episode, or as a story in Seeking Rents the newsletter, I'd love to hear from you. My email address will be in the show notes and my Twitter DMs are always open: @Jason_Garcia. And if you've got any bad faith complaints or criticisms, or you just feel like lobbing some lazy, anonymous innuendo, we've got a separate email address for that: theodorehayes94@gmail.com.

Google it.

Thanks for listening to everybody. See you soon.