Florida lawmakers tend to steer clear of legislation that would reduce tax revenues. That’s understandable. But as economist Arthur Laffer proved in the 1980s, lower taxes can also produce higher tax revenues.
House Bill 121, sponsored by State Rep. Ralph Poppell, R-Vero Beach, would “require the Office of Economic and Demographic Research to annually perform economic impact analyses of legislation affecting tax laws.” Translation: Lawmakers could consider measures that might start as revenue losers, but become revenue generators by stimulating economic activity.
The “dynamic scoring” analysis would “open the door to allow the Senate president and speaker of the House to look at bills,” Poppell says.
If that can produce more revenue and lead to a more productive tax code, what’s not to like?
One example involves aircraft sales and services.
At $120,000, Florida’s tax on a $2 million Piper Meridian puts many prospective buyers into a tailspin.
The 6 percent levy applies to all planes sold in the Sunshine State.
Adding to the downer, the Department of Revenue even taxes out-of-state owners who fly their planes here for repairs, modifications or further training.
“We’re grossly mistreating owners,” says Poppell, who has filed House Bill 173 to ease that mistreatment.
The bill would halve the state aircraft tax from 6 percent to 3 percent, and give pilot/owners 20-day “fly-in” protection from additional fees.
Poppell has floated this idea twice before, but, after clearing the House, his proposal was defeated in the Senate amid fears that the state would lose much-needed tax revenues. Analysts have estimated that Poppell’s bill could cost the state $5.9 million in the first year.
But deeper analysis projects that those losses could be wiped out by the second year, as lower taxes drive more sales in the state.
Florida is definitely at a tax disadvantage with its neighbors.
According to Poppell, that same turbo-prop Meridian purchased in Georgia carries a tax of $80,000 while Alabama would collect $40,000.
Under HB173, a $60,000 Florida tax tab would split that difference and still be sharply higher than North Carolina ($1,500) and South Carolina ($300).
It’s time Florida brought its aircraft taxes back to Earth.
-- Guest editorial from our sister newspaper The Stuart News