UPDATED: All of the tax cuts passed easily.
The Florida House?s chief tax-writing committee plans to take up more than $125 million worth of tax cuts today, ranging from broad business tax cuts sought by Republican Gov. Rick Scott to narrower breaks for everyone from manufacturing companies, private-airplane owners and oil-drilling concerns.
Among the items on the agenda of the House Finance and Tax Committee, which is chaired by Orlando Republican Rep. Steve Precourt, is a multi-pronged ?economic development? package (PCB 12-07) that includes two of Scott?s biggest legislative priorities this spring.
One would double the state?s year-old corporate-income tax exemption from $25,000 to $50,000. Scott, who campaigned for office on a pledge to eliminate the 5.5 percent corporate income tax entirely, says the move would allow 25 percent of the companies currently paying the tax to stop. And he says it would raise ? to 65 percent ? the number of tax-paying companies that will have been removed from the tax rolls since he was elected in November 2010.
Tens of thousands of businesses, including some large ones, were already avoiding the tax because they are organized as limited liability companies, subchapter ?S? corporations or other entities that the Legislature has opted not to tax.
The second provision sought by the governor would make it easier for manufacturing companies to avoid paying sales tax when they buy industrial machinery or other equipment. Manufacturers must currently prove that the purchases will increase their productive output by 10 percent in order to skip the sales tax; the legislation lowers that threshold to five percent. In addition to Scott, it?s a top legislative priority of the Manufacturers Association of Florida, whose biggest contributors are phosphate miners Mosaic Co. and Potash Corp. and cigar-maker Swisher International Inc.
The economic-development legislation also includes several more narrowly tailored tax breaks.
The biggest of those would allow many owners of private airplanes to stop paying sales taxes on repairs to their planes, by expanding a sales-tax exemption that is currently limited to planes weighing a minimum of 15,000 pounds to cover all planes weighing more than 2,000 pounds. The Aircraft Owners and Pilots Association is one of the groups lobbying for the cut.
Another would eliminate sales taxes on chemicals, parts and equipment used in the production of airplane engines or gas-turbine engines. The break is expected to save one big engine-manufacturer, Palm Beach Gardens-based Chromalloy, approximately $900,000 a year, according to legislative analysts, though boosters say other engine-makers would also realize smaller tax savings, as well.
A third sales-tax break would help the citrus industry by completely eliminating the tax on electricity used in fruit and vegetable backing houses, regardless of whether the facility is on a farm. The Florida Farm Bureau is among the organizations lobbying for that break.
Another big winner: the Sanford-Burnham Medical Research Institute in Orlando. Burnham, which came to Orlando after receiving one of the richest incentive packages in Florida history, would be guaranteed 1 percent of the proceeds from the state?s cigarette tax ? up to $3 million a year in total. (The H. Lee Moffitt Cancer Center in Tampa would be given an even larger slice of the tax.)
Beyond the big economic-development package, the House committee is expected to take up several standalone tax bills. One (HB 87) would cut taxes on companies that drill in older, onshore wells, which may contain leftover oil that is now able to be extracted because of technological advances.?Among those lobbying for the break is Breitburn Energy Partners, a Los Angeles-based drilling firm that owns five oil fields in southwest Florida.
Another piece of legislation (HB 369), sought by the Florida Realtors association, would exempt real-estate agents from having to pay local business taxes levied by cities or counties. That is expected to save real-estate professionals ? but cost cities and counties ? $3.8 million a year.
Even bigger tax cuts could go on the ballot this fall. One bill to be taken up (HJR 1003) would ask voters to give the Legislature authority to increase exemptions for property taxes levied on business equipment known as ?tangible personal property.? The exemption could be raised to whatever amount future Legislatures want ? even to the point where the tax is effectively eliminated. It?s another item on the wish list of Scott and the manufacturing industry.
A companion bill (HB 1005) would then immediately double the existing $25,000 exemption to $50,000, though only for businesses that have no more than $50,000 worth of tangible personal property in total.
Another proposed amendment (HJR 1289) would ask voters to approve a huge new residential homestead exemption ? and give the Legislature the power to raise it even further in future years.
At the current property-tax rates, an extra $25,000 tangible personal property tax exemption would cost local governments roughly $20 million a year while the expanded homestead exemption could cost them roughly $570 million a year. And the Legislature could opt to write even bigger exemptions without further constitutional amendments.
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