Florida Republicans Should Avoid Tax Hike Trap

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Posted on Thursday, March 25th, 2021, 12:50 PM PERMALINK

Legislators in Florida are facing House and Senate legislation that would implement an Internet sales tax in the state, taking over $1.2 billion more out of the pockets of taxpayers, over $1 billion of which would go to state coffers.

To offset these new revenues, both HB 15 and SB 50 would send money collected to the unemployment trust fund in order to prevent anticipated, automatic increases in U.I. taxes for businesses.

That is great, but this plan falls short of the permanent dollar-for-dollar tax reduction needed to offset the tax hike over time. After the unemployment fund is refilled in around four to five years, there is no savings for Florida taxpayers. So they’ll be paying over $1 billion more in sales taxes without corresponding savings from the state.

Unfortunately, this would violate the Taxpayer Protection Pledge. More than 30 Florida state legislators and Governor DeSantis have signed the pledge, committing to their voters in writing that they will oppose any such tax hike.

Now that Congress has decided to shower states with billions of dollars in aid that only poorly managed blue states wanted, HB 15/SB 50 would put legislators in the position of voting to increase taxes on Floridians while the state is sitting on over $10 billion from Washington. The previous concerns about a budget gap that were used to justify prioritizing online sales tax are irrelevant now.

This adds a concern that Florida Republican legislators could vote for a tax hike while the state is flush with federal aid. That aid could be devoted to the U.I. fund that was depleted due to the pandemic, instead of using new tax revenue.

This is exactly what Congressional Democrats and President Biden would want Florida to do: increase taxes to pay for unemployment, then be stuck with $10 billion that cannot be used for tax relief, even ‘indirectly’. That money can then go to grow government, instead of helping taxpayers. Florida taxpayers end up with higher taxes and more government to pay for in the future. 

The unconstitutionally restrictive no-tax cut language in the relief bill may cause a fight with the federal government in this case, but what better policy to fight over than refilling unemployment systems that were crushed by the pandemic. What else is pandemic relief money for?

Florida has won with low taxes, and limited regulation. That has led to a booming economy and population growth.  

Thanks to Governor DeSantis’ refusal to cripple the Florida economy with wide shutdowns, the state has done better than most other states during the pandemic. It would be a mistake for Republicans to sour this success story by marking the end of the pandemic with an annual billion-dollar tax hike, falling into the trap set by Washington Democrats.

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