Florida senators approve rental car tax break

A group of Florida senators voted Tuesday to give $2 million tax breaks to rentalcar giant Avis Budget Group Inc. and a few other big companies that rent or lease cars.

The Senate Commerce and Tourism Committee unanimously approved the tax break (SB 1240), which could also save $2 million each for Hertz Global Holdings Inc. and Enterprise Holdings Inc.

Avis and the rental-car industry have been lobbying Florida lawmakers for a tax break for more than a year. They want one to offset an increase to their state corporate income tax bill that was caused indirectly by the deep federal corporate income tax cuts that Congress passed and President Donald Trump signed in late 2017.

The issue involves an obscure federal tax break that allowed Avis and other rental and leasing companies to put off — for years — paying corporate income taxes on the income they earned selling used vehicles from their fleets. That tax break worked by letting the companies treat their used car sales as if they were just trading old vehicles for new ones.

But Congress eliminated that tax break as part of the 2017 Tax Cuts and Jobs Act. So all those income taxes the rental-car industry had been putting off for years came due.

It wasn’t a problem for the companies on their federal tax bills, because the 2017 tax law also contained enormous new tax breaks — including cutting the federal corporate tax rate by 40 percent.

But the companies had to pay all the Florida corporate income taxes they had been deferring, so their state tax bills spiked. Avis, which had been using the old federal tax break to put off tax payments for 15 years, has said its Florida tax bill jumped roughly ten-fold when it had to pay them all.

Corporations have done very well overall under the federal tax law. For instance, after that law was passed, executives at Hertz, which is based in southwest Florida, told Wall Street analysts that “we do not expect to incur significant cash taxes in at least the next three to five years.”

But Sen. Joe Gruters, R-Sarasota, the sponsor of the tax break, said lawmakers should help the companies because they were “suddenly liable for huge taxes” on their Florida tax bills.

“What we’re trying to do is we’re trying to give them some relief,” said Gruters,

is also the chairman of the Republican Party of Florida. “For me, there’s a lot more we could do for these companies.”

Parsippany, N.J.-based Avis earned $189 million in profits on just under $2.8 billion in revenues during its most recently reported quarter. Estero-based Hertz earned $173 million in profits on just over $2.8 billion in revenues during its most recently reported quarter. St. Louis-based Enterprise,

which is privately held and doesn’t report detailed financial results, said it did $25.9 billion in sales during its 2019 fiscal year.

Some of the companies are also significant campaign contributors. For instance, records show Enterprise has donated more than $120,000 over the past year to state lawmakers, political committees and political parties.

The legislation doesn’t mention any specific company by name. But records show the idea came from a lobbyist for Avis. And Gruter has said he expects both Enterprise and Hertz to benefit, too. The three companies dominate the U.S. car rental market.

There may also be a handful of big companies that lease vehicles — such as Ford Motor Co. or JM Family Enterprises Inc., a major Toyota distributor — that could also qualify for the tax breaks.

Lobbyists for the business groups Associated Industries of Florida and the Florida Chamber of Commerce testified in support of the measure.

The initial version of the bill would have given $10 million tax breaks to the companies. But it was rewritten Tuesday to reduce the amount to $2 million each. That was enough to win over Victor Torres, D-Kissimmee.

“Originally, it was much larger on this bill,” said Torres, who added that the rental car companies are “paying their fare share in taxes.”

While it is a tiny amount in the context of a $90-plus billion state budget, $2 million is enough money to pay the first-year salaries of more than 40 new teachers. And if four companies were to claim the tax break — boosting the impact to the state to $8 milwho lion — that would be enough money to pave more than 20 miles of pedestrian and bike trails.

Legislative leaders have warned during the first few weeks of their 2020 legislative session that this could be a tight budget year. Last week, the state House of Representatives proposed pulling $240 million out of a fund to pay for affordable housing programs to spend the money on other needs.