Florida ranks fifth in business climate, but tax appeal may be overrated

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Florida’s business climate ranks fifth in the nation, according to a new national report.

Yet in a Budget Watch white paper released today, independent government watchdog Florida TaxWatch points out flaws in the report, which may have over-calculated the appeal of the state’s tax system.

Florida’s high ranking comes from the Tax Foundation, a non-partisan economic think tank based in Washington, DC. Every year, the group issues a Business Tax Climate Index, which compares tax structures between states. In this year’s Index, Florida is the largest state in the top five; Texas came in tenth. California, New York and New Jersey ranked as having the worst tax climates.

“Florida’s tax structure is one of the many factors that makes Florida a good place to do business,” said Florida TaxWatch president Dominic M. Calabro. “However, there is always room for improvement. Instead of focusing on Florida’s 5th place ranking, policymakers should look at where they can make needed reforms to help welcome additional capital, more jobs, and further economic growth to the Sunshine State.”

Even though the state scored highly in all tax categories of the Index, Calabro notes that property and sales tax rankings may be overstated. One factor given the most weight in the Tax Foundation rating is personal income tax; Florida does not have individual income taxes.

Calabro argues that Florida’s property tax structure shifts burden to non-homestead properties, such as businesses. In addition, high sales and excise taxes rate, as well as taxes on commercial leases, communications, and non-residential electricity may not have been reflected accurately when Tax Foundation ranked the state’s sales tax.

Kurt Wenner, Florida TaxWatch Vice President of Tax Research, believes an accurate reflection of the state’s tax landscape could give lawmakers an idea of how to make things better for taxpayers.

“Other states are taking significant steps to improve their business tax climate,” Wenner said. “Florida lawmakers have an opportunity to use the tax ranking information to address real tax reform in our state.”

Among the reforms called for by Florida TaxWatch is elimination of the sales tax on commercial leases, reducing communications services tax, eliminating tangible personal property tax, and collecting online sales taxes.

The Budget Watch white paper, which provides a deeper examination of the state’s tax climate, is now available online.

Nov 14 Budget Watch Final

Phil Ammann is a St. Petersburg-based journalist and blogger. With more than three decades of writing, editing and management experience, Phil produced material for both print and online, in addition to founding HRNewsDaily.com. His broad range includes covering news, local government and culture reviews for Patch.com, technical articles and profiles for BetterRVing Magazine and advice columns for a metaphysical website, among others. Phil has served as a contributor and production manager for SaintPetersBlog since 2013. He lives in St. Pete with his wife, visual artist Margaret Juul and can be reached at phil@floridapolitics.com and on Twitter @PhilAmmann.