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Monday, February 26

No Property or Income Taxes?

Government needs money to run. In Florida, we already don't have all three of the kinds of taxes: income, property, and sales (maybe use tax is a fourth kind). As a state, we've decided to eliminate income tax, which makes Florida a safe-haven for top-earners and retirees, while shifting the tax burden to lower classes and tourists. Now, the legislature has a plan that seems to shift the tax burden even further in that direction by suggesting we eliminate property taxes.

The problem is that getting rid of taxes doesn't make government cheaper. It just shifts the burden. In Jacksonville, for example, we just added to our property tax burden by voting to give teachers and the arts a pay hike in Duval schools (and probably charter schools). A property tax elimination, even if it's capped, will lead to huge deficits unless huge fees placed on others. 

My house is probably about the average home in Jacksonville. I pay about $3,000 in property taxes. Let's say an average of 4 people per household in Jacksonville, meaning 250,000 households in a city of a million. That's $750,000,000. Gone. So we double the sales tax. The fat cat who winters along the intracoastal and claims Florida citizenship will pay $0 income taxes and $0 property taxes on his multi-million dollar home, but I guess he'll chip in when he invest that same $30,000 (his current property taxes) at Home Depot to upgrade the sink in his 7th powder room. Problem is, the government would only get a portion of that $30,000. Even if we add an insane sales tax of 10%, that's only $3,000 of the original $30k, and what if he doesn't upgrade the powder room? There's no evidence that rich folks can possibly buy enough Porsches to make up for not paying income or property taxes, even if they will now be able to afford more Porsches.