Despite Republican control of the state House and Senate, Florida Democrats say they plan to try next year to repeal a new state law that gives a half-billion-dollar tax refund to major corporations.
Republican legislative leaders peddled the tax refund, along with a corporate tax rate cut, as Florida’s response to changes made at the federal level in the Tax Cut and Jobs Act of 2017.
“When you see $500 million go away to major corporations, it’s a smack in the face to taxpayers who don’t get those same type of refunds and are just surviving paycheck to paycheck,” said state Rep. Anna Eskamani, an Orlando Democrat.
Eskamani, along with most of the state House Democrats, opposed the law passed in the spring session that essentially created a three-year plan to reduce corporate taxes for some of Florida’s largest companies.
A new statewide revenue forecast shows that increased corporate income tax collections last year means a $543 million refund for the companies next spring, as required by the new law.
The companies will also be in line for an estimated $134 million corporate-tax refund in the spring of 2021, the estimate shows.
The Orlando Sentinel reported that “only an elite circle of corporations will receive refunds — an estimated 99 percent of Florida’s 2.3 million businesses won’t see a dime.”
Eskamani says the tax refunds would be better spent on pressing state needs such as increasing teacher salaries or reducing a waiting list of more than 21,000 Floridians who need state services to deal with intellectual and development disabilities, such as cerebral palsy or Down syndrome.
“It’s so frustrating that we don’t have money for programs when we are literally, with great intent, just giving away money,” she said.
Although Democrats oppose the law, it will be difficult to repeal as long as the Republican majority supports it. Additionally, a constitutional amendment adopted by voters in 2018 requires a two-thirds vote by the House and Senate to increase taxes. Getting rid of the special tax cut could be politically defined as raising taxes.
Not surprisingly, the Florida Chamber enthusiastically supports the new Florida tax cuts.
“This not only signals that Florida is serious about being a top tax climate in the country, but allows businesses to continue to reinvest in their employees and their company to further strengthen Florida’s economy,” Carolyn Johnson, a policy adviser with the Florida Chamber of Commerce, said in a prepared statement.
But Eskamani says that she and other Democrats will attempt to repeal the corporate tax breaks in the 2020 session that begins in January. She says while the major corporations may have faced higher state taxes, overall their net tax bills will be lower because they benefited from a major cut in the federal corporate tax rate.
“I think it’s absurd how much money we’re returning back to major corporations that don’t need this for their bottom line,” she said.
Eskamani also notes the tax breaks will benefit the largest companies in the state, while doing “nothing for small businesses,” which represent the bulk of employers in Florida.
She says businesses benefit when the state can provide “a strong quality of life.”
“Folks want to come to states like Florida when we prioritize public education, higher ed, transportation, health-care access, diversity, inclusion,” Eskamani said. “That’s what attracts major businesses to our state who bring high-paying jobs. It’s not because of giveaways. It’s not because of, necessarily, our low-tax state. It’s one thing to be low tax, but we can’t be low benefits. At this point, we have a lot of unmet needs.”
Florida TaxWatch, an independent government watchdog group, also defended the tax refunds and corporate tax rate cut.
The organization, whose board includes representatives from some of Florida’s major companies, said it is “likely,” even with the refunds and rate cut, that corporations will still face higher tax bills. That’s because the refund and rate cut are not triggered until tax collections increase by more than 7 percent over the estimate, according to TaxWatch.
“These refunds have been portrayed by some as ‘huge tax breaks’ for corporations,” TaxWatch said in a report. “It must be remembered that the Legislature was trying to avoid a tax increase from the federal law and these refunds return what would otherwise have been one.”
During the 2018 legislative session, the Florida Legislature originally passed a one-year tax refund and rate cut based on the expected increase in corporate tax collections. During the 2019 legislative session, the legislature then expanded the tax break, extending it until January 2022.