Senate Democrats Attempts to Help Floridians Rejected by Republicans

TALLAHASSEE – With hundreds of university professors, thousands of catastrophically ill Floridians, and scores of children’s programs on the line, Senate Democrats on Friday offered the Legislature for the second time in less than a year a billion dollar financial lifeline.

Senate Republicans threw it back - again.

“The money we found didn’t involve raising taxes a single penny,” said Senate Democratic Leader Al Lawson (D-Tallahassee). “It didn’t burden Floridians struggling to hold on to their jobs and their homes. And it didn’t attempt to raid teachers’ pay checks or toe the line of financial extortion on traffic tickets and court costs. All it did was wean some very wealthy special interests from the corporate welfare they’ve enjoyed for years. It’s time they joined the rest of us and paid their fair share.”

The money lifeline offered by Democrats came in the form of amendments sponsored by Senators Lawson and Dan Gelber (D-Miami) closing several tax loopholes tailored exclusively for high-end developers and non-Florida based corporations, and a review of certain exemptions. They were:

The real estate transfer tax loophole: Doc stamps most of us pay when property is sold are evaded by placing real estate into a trust, as one method, transferring the trust into a corporation, and then selling the stock in the corporation. For example, one company’s reported 2005 sale of six apartment complexes recorded the $300 million deal at only $60, and so avoided a $2.1 million tax bill. Estimates vary, but closing this escape hatch could fetch up to $200 million annually.

Combined Reporting: Closing this loophole could generate up to $400 million annually. Already eliminated by a growing number of states including New York and Texas, multi-state corporations such as some fast-food and toy store giants tap this loophole by setting up real estate rents or trademark fees through chains located in no-tax or very low-tax states, and so avoiding the tax due in Florida. This maneuver leaves those Florida-based and operating companies at a great financial disadvantage.

The third amendment involved sales tax exemptions – currently running in excess of $23 billion annually. The measure would have given the Legislature a process for review of all sales tax exemptions other than those for food, prescription drugs, health services, charitable and religious institutions, and certain others. The revenue generated from those exemptions eliminated would have been dedicated to education and the reduction of that portion of the property tax paying for local education budgets.

“We need to reexamine our priorities, especially when we face the severe damage we are levying on our social services programs and our kids’ education,” said Gelber. “It’s hard to justify a company using its toy logo to dodge Florida taxes when the very kids they’re selling to are about to lose their teachers.”

Friday’s efforts were not the first time Senate Democrats had attempted to stem the severity of the cuts to state services necessitated by the economic downturn. Similar efforts during the 2008 Legislative Session were also rebuffed by the Republican leadership.

“They can’t say they didn’t see this coming, and they can’t say they need more time to study these solutions,” said Lawson. “The longer the state waits for tax fairness, the faster the slide off the edge of the cliff.”