The Florida House on Thursday overwhelmingly passed a $690 million tax cut package that would save small businesses, cellphone users and college students a few bucks. But there’s no guarantee that the Senate would do the same.
That’s because there is a big fight underway between the chambers over two health care issues. The Low Income Pool (LIP) funding – a $2.2 billion program that helps hospitals treat low-income patients. Financed largely by the federal government, the program will expire on July 1, 2015.
In a compromise with the federal government, the Senate has proposed to restore the LIP funding by expanding Medicaid under the Affordable Care Act, aka, Obama, which Gov. Rick Scott and the House are opposed to. Hence, the stalemate.
Meanwhile, the Florida Center for Fiscal and Economic Policy (FCFEP), argues, in a just-released policy paper, that a $690 million tax cut is not the way to go.
Although the Senate has not yet announced their tax cuts package, several, totaling about $800 million, have cleared the Senate Finance and Tax Committee. However, there is agreement between both chambers on the most expensive cut, one that would cost the state $471 million annually – a reduction in the communications services tax, currently levied at a 6.65 percent on telephones and cable and satellite television.
The $471 million would be a major hit to the state’s coffers, but only an estimated annual savings of $40 per person and $160 per family, FCFEP points out.
Moreover, such a sizable tax cut when compared to other funding amounts would be larger than the entire Voluntary Prekindergarten Program budget; more than three times larger than the $141 million increase in state funds for state universities; 16 times larger than the $29 million increase in state funding for state colleges; and more than the total state funding for state student financial aid to college and university students.
Other tax cuts included in the House package, in addition to the communications services tax and their annual cost include: exempt books sold at book fairs from sales taxes, $2.8 million; exempt gun club memberships from sales taxes, $1.2 million; small business Saturday sales tax holiday, $40.3 million and new corporate income tax credit for defense contracting companies that hire Florida-based subcontractors, $5.5 million.
The FCFEP authors conclude that, given the needs of the state, “now is not the time to pass $600 million to $800 million in tax cuts, many of which benefit a few selected businesses along with a small return for consumers, even while serious issues of life and death require limited state resources.”
