WILL FLORIDA BECOME A FAIRTAX STATE?
Recently, Florida Governor Ron DeSantis proposed eliminating the property tax in his state. Florida is the country’s third-largest state with the fourth-largest economy. It already has no state income tax or death taxes. If DeSantis succeeds in eliminating property taxes as well, Florida would come close to being an actual FAIRtax state. If you live in Florida, you can make it happen.
The three states where substantial efforts are underway to implement a state-level FAIRtax are Alabama, Georgia, and Nebraska. Each is taking a different path toward that goal. In Georgia, Jim Duffie is working within the state Republican Party. In Alabama, Chuck Bailey is working with the state legislature to pass the Alabama Economic Freedom Act.
Nebraska is an interesting case. There, Rob Rohrbough is leading a group to circulate a petition to eliminate all state and local income taxes, inheritance taxes, and, like Florida, property taxes. Rob’s goal is to put the petition on the general election ballot in 2026.
Nebraska has the ninth-highest property tax burden in the nation. Rocket Mortgage ranks Florida’s property tax rates about in the middle.
So, if Governor DeSantis succeeds in eliminating the property tax in Florida, what further steps must he take to implement a state-level FAIRtax? As we said, Florida already has no income or inheritance tax. The national FAIRtax eliminates both these taxes at the federal level, as well as the payroll tax that funds Social Security and Medicare.
Florida has no counterpart to Social Security and Medicare, except perhaps for Medicaid, which Florida does not fund through payroll taxes. Thus, Florida does not need to replace any counterpart to Social Security and Medicare.
Florida does, however, have a payroll tax that will probably stay. This tax is commonly known as the Reemployment Tax, which funds unemployment insurance. This tax appears on the pay stub as SUTA and is deducted from payroll. Unlike income, death, and federal payroll taxes, this tax is directly related to and benefits work.[i]
The significant tax that Florida still needs to replace to implement a state-level FAIRtax is the corporate income tax. Although Florida has no personal income tax, it does levy a corporate income tax. The Florida corporate income tax rate is 5.5% of earnings. This tax is the second-largest source of tax revenue, accounting for 12.1% of the total state tax revenue.[ii]
The property taxes that Governor DeSantis wants to replace are not state-level taxes. Instead, they are collected by counties and localities to fund their respective services and operations. According to the accounting firm J.S. Morlu, the current sales tax rate would have to climb from 6% to 14% just to replace property taxes. The measure would also require an amendment to the state constitution.
Replacing the property tax has a clear appeal. The first is that today’s homeowners who have paid off their mortgages feel that they still do not own their homes but instead “rent” them from the local government. If the homeowner fails to pay property taxes, the local government may initiate tax foreclosure and sell the property.
The second appeal is that homeowners will be more willing to improve their properties if those improvements don’t result in a higher tax assessment and a bigger tax bill. Public policy favors homeowners improving their homes to preserve neighborhoods.
The third appeal is that many non-residents who come to Florida for a vacation pay the sales tax, but not the property tax. Shifting the burden to the sales tax would relieve Floridians from much of the cost of government. The benefit includes tenants, who pay property taxes indirectly.
To have a true state-level FAIRtax in Florida, the tax must cover the cost of the Prebate. The Prebate would raise the required sales tax rate but would put Floridians in control of when they pay tax and how much tax they pay.
So, what must the rate of a Florida FAIRtax be? We have a nearly twenty-year-old study showing what the Florida sales tax rate would have been to achieve a true state-level FAIRtax.[iii] The study did not replace property taxes. It found that the rate to replace the current Florida sales, income (corporate income tax in Florida), and death (excluding Florida) taxes with a prebate is 6.01%. The statewide sales tax then, as now, was 6%. The reason the rate could be nearly the same was that the FAIRtax tax base is broader.
So, do you think Governor DeSantis’ proposal to replace property taxes in Florida should be a springboard to push for a true statewide Florida FAIRtax? Please get in touch with our State Director, Paul Livingston, if you do. His contact information is paulforfairtax@yahoo.com or (904) 735-7565. If you follow through on this idea, I would love to hear about your progress.
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[1] You can design your own business card. I had mine printed at https://www.vistaprint.com. Here’s mine. Please clear your design first with our Marketing and Communications Team Leader, Randy Fischer, randy.fischer@fairtax.org. Randy turns requests around quickly. We need to know where our logos and service marks are going.
🇺🇸 Call For Pictures & WriteUps - We need more of you to send in pictures and news. If you have something to share, please send your material to me, Jim.Bennett@FAIRtax.org, (908) 578-4975, or fax (908) 598-2888. When others see your activity, they are inspired, and the process snowballs. When the process snowballs, Congress Members, Senators, and even the President start to listen.