Governor Scott Takes Aim at the Corporate Income Tax
In a recent Bloomberg television interview, Governor Rick Scott of Florida detailed his plan to cut $500 million in state taxes and fees. The state of Florida is currently projecting an $846 million budget surplus in fiscal year 2014, as well as the highest level of state revenue recorded in the state’s history. This is an impressive feat, considering the state cut taxes in 2013 after passing a measure exempting all manufacturing equipment from sales and use taxes.
The Governor remarked, “In our state, in contrast to what’s happening in D.C., we know it’s your money. So, we’re going to cut taxes and fees, that’s $500 million. We’re going to make sure you have more money in your pocket so you can help your kids get a better education, buy a house, start a business—because we know it’s your money.”
Governor Scott is in the process of determining exactly which taxes and fees will be reduced under the plan. In the interview, Scott mentioned that the fees on licenses and a tax on leases would both be targets for reduction or elimination. Interestingly, the Governor stated that 70% of Florida businesses do not pay a business tax because the state has increased the tax credit annually, reducing the total number of businesses who need to file.
Given Florida’s friendly business climate, it’s no surprise that companies are relocating their business operations to the Sunshine State. In May 2013, Hertz rental car company announced that it will move its headquarters from New Jersey to Florida—bringing 700 jobs with an average annual salary of $102,000 to the Sunshine State.
If Florida is able to achieve Governor Scott’s stated goal of completely eliminating the corporate tax, other major employers are certain to follow. Such a move would have a substantial impact on Florida’s competitiveness, making it even more attractive to businesses looking to relocate.
Florida currently ranks 9th in ALEC’s Rich States, Poor States report, an annual study that primarily evaluates economic competitiveness among the states. Governor Scott’s goal for Florida is in line with ALEC’s principles of taxation which state that tax policy should be simple, transparent, neutral, predictable, and pro-growth. If Governor Scott’s tax plans become a reality, it is likely that Florida’s ranking will improve substantially.