Killing Florida’s Property Tax Will Also Kill Florida’s Construction Industry
Florida House Speaker Marco Rubio, following his natural Republican inclinations, wants to eliminate property taxes in Florida and raise sales taxes to partially compensate for the loss of property tax revenue. For most local governments, property taxes are the main source of revenue, since Florida has no income tax. And since Rubio and other legislators whose primary purpose in life is to make sure our greediest residents flourish while everyone else wilts refuse to tax service sales along with sales of tangible items, this tax plan would move Florida farther toward Leona Helmsley “only the little people pay taxes” Republicanism than ever. But it would also kill Florida’s construction industry, thereby putting a big hurt on a large percentage of our state’s greediest citizens even as it helped others of their ilk. And this problem — not compassion for the working poor or sound fiscal thinking — is why Rubio’s tax-shift plan will not become law.
We hear constant whining about how taxes on rental and business properties, along with second homes, have doubled or tripled in recent years. People who actually live in Florida, as opposed to owning second (or third or fourth) homes here are protected from most property tax increases, but this still leads to inequity, since a person who bought a Florida home in 2005 is paying a lot more tax than someone who bought in 1985, for a much lower price, and has a much higher starting point for tax-increase protection than his or her neighbor.
I’m actually okay with this. I know people who, years ago, bought modest homes in old fishing villages that are now turning into havens for the overmonied. Why should someone who bought a decent little house in a decent little community be penalized because a bunch of greedheads suddenly want to transform his town into a sub-tropical suburb of New York City? I’m sorry, but if you want to move anywhere that’s now “hot” in the real estate market, you are going to pay more for your property — and more property taxes — than people who moved there before it got “discovered.”
We can cure the overtaxation of business and rental properties, in scenic (former) fishing villages (and elsewhere) simply by taxing them based on their current use instead of using some tax appraiser’s estimate of what they would be worth if they were replaced by ugly high-rise condominiums or overblown McMansions. As far as the second-home people, I have little sympathy for them. We have plenty of people around here who have trouble paying for one house or even renting a crummy little apartment. Why are we supposed to go “boo hoo hoo” for people who can afford two houses and feel overtaxed? I’m sorry, but when this crowd whines, I have no sympathy.
Why killing property tax will kill development
I’m going to let you in on a secret: most of the recent Florida property tax increases pay for growth!
Without a whole bunch of new development, our counties and cities wouldn’t be spending a bunch of tax money on new and widened roads, more police, more schools and teachers, more hospitals, more parks, more boat launch ramps, larger courthouses, and all the other capital improvements needed to accomodate a growing population.
The way growth is “sold” to people already here is that the new people will pay property taxes, so new construction “increases the tax base” and pays for itself in the long run. In addition, to pay some of the expenses involved in building new communities (before the new property tax payments kick in), most jurisdictions charge “impact fees” to developers, who pass them on to buyers.
But even the most draconian impact fees don’t really pay for all growth costs. I mentioned the need for larger courthouses to accomodate a growing population. Guess what? Once you build a bigger courthouse you need more judges, more bailiffs, and more court clerks, and their salaries are not one-time budget items but go on more or less forever. Ditto teachers, police and sheriff’s deputies, building inspectors, garbage collectors, water treatment plant operators, and a whole raft of other people you need to hire to serve new residents.
Now, I’m personally okay with halting all development or making developers pay not only impact fees on new construction but also forcing them to finance a “growth trust fund” with $250,000 (or more) for each unit they build so that they cover all anticipated future government expenses for the new residents they want to bring to Florida.
Without those trust funds, and with no (or severaly reduced) property taxes, no sane Florida taxpayer will allow his or her local elected officials to issue a single new building permit without getting turned out of office at the next election — unless they are all impeached before that election.
Maybe Marco Rubio and his Republican cronies need to think about what will really happen if they try to do away with property taxes. Or maybe they have, and this is their sneaky way of stopping all construction here — and getting rid of all the illegal aliens who work in construction trades, too.
I’m fine with these two goals, myself, but I don’t think many developers will be. And without developer support the Republican Party in Florida will soon fade to a shadow of its current self — not that I think this would be such a bad outcome, either. 