November 17, 2019

Tax Break Merry-Go-Round

Florida's tax law exemptions

Jason Garcia | 6/24/2019

“When you would send flyers out with coupons — no tax. But if you happened to put them in an envelope, suddenly you were taxed. It didn’t seem to make a lot of sense,” says Altman, who was first elected to the House in 2003 and has moved back and forth from the House and the Senate. “The Valpak people were wanting fair treatment.”

Exemptions galore

And this is where things stand today. A tax break passed 70 years ago for publishers of newspapers today saves money for magazines (including Florida Trend), community papers, apartment guides, industry newsletters and all kinds of junk mail — almost everything except newspapers. The once-tiny tax break costs the state an estimated $40 million a year.

It is, of course, a relatively small amount in the context of the roughly $30 billion a year the state makes overall from sales taxes. But experts say it illustrates a frequent pattern with many of the tax exemptions, credits and breaks that dot Florida’s tax code. While an individual tax cut may start out narrow and small, it is very likely to grow over time as more taxpayers figure out ways to squeeze into it, or as industry and technology evolve in ways that weren’t foreseen, or lobbyists persuade lawmakers to cut their clients in, too.

Florida’s sales tax alone includes more than 270 exemptions. “These things get into place — some of them for very valid reasons — and then they continue to expand and expand,” says Andrew Appleby, a tax law professor at Stetson University. “The next thing you know — sometimes a couple of years later, sometimes 30 years later — you have all these exemptions. And now your tax base is much lower.”

Others, like Anne Mackenzie, are more blunt. Mackenzie served in the Legislature from 1982-98, a Democrat representing Broward County whose tenure included a term leading the House’s finance and tax committee.

“What happens is, as soon as somebody realizes that somebody else is getting a better deal, they want to level the playing field,” Mackenzie says. “So, of course, they come to the Legislature.”

 

Read more in Florida Trend's July issue.

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