DeSantis calls for tax refunds for corporations

Florida Gov. Ron DeSantis plans to go ahead with more than a half-billion dollars in tax refunds for the state’s largest corporations — even as the state economy crashes amid the spreading coronavirus pandemic.

The Republican-controlled Florida Legislature committed to the corporate tax refunds — which will total $543 million — two years ago, long before lawmakers had any idea how big they would be. The state hasn’t paid them out yet and doesn’t have to until May 1.

But Florida is suddenly bracing for a potentially unprecedented drop in sales tax collections as commercial activity shuts down, along with surging demand for state government services as workers across the state lose their jobs en masse. So some activists want DeSantis to use his emergency power as governor to stop the refunds.

“This is $540 million that we will definitely need,” said Sadaf Knight, the CEO of the Florida

Policy Institute, an Orlandobased think tank that advocates for higher corporate taxes and lower taxes for low-income Floridians. “Corporations have been getting a break for many, many years. It’s really families and individual Floridians who really need the break now.”

But a spokesman for DeSantis said Wednesday that the Republican governor will allow the refunds to go out the door.

“The corporate taxpayers who are entitled to receive these automatic tax refunds under the law have anticipated these refunds and have likely made business decisions around them,” DeSantis spokesman Ryan Ash said. “At a time when businesses are being pinched with closures and reduced revenues, these automatic tax refunds will inject capital back to employers at a time when they need those dollars to continue operations and employment.”

Only a very narrow sliver of Florida businesses will get the tax refunds. That’s because only about 1 percent of all businesses in the state pay any Florida corporate income tax, which national experts say is one of the easiest-to-avoid state corporate income taxes in the country.

The size of a corporation’s individual refund will depend on the amount of corporate taxes they paid last year. The refunds will not take into account how the business is faring now during the coronavirus crisis.

The refunds were part of the Florida Legislature’s response to the sweeping federal tax overhaul that Congress and President Donald Trump passed in late 2017. That law dramatically cut federal taxes for corporations. But it also made changes that forced them to give some of those savings back in the form of higher state taxes.

Republican leaders in Tallahassee said they didn’t want corporations to pay significantly higher state taxes, so they passed a law in 2018 promising to refund corporate tax payments above a certain threshold. Lawmakers said at the time that they didn’t expect the refunds would be substantial. The refunds ended up totaling more than Florida spends annually on pre-kindergarten.

Lawmakers also temporarily cut the state’s corporate tax rate, so companies are also paying lower taxes during the current year, too. The Legislature then extended those refunds and rate cuts for another two years.

But all of those decisions were made before the coronavirus pandemic erupted and prompted wide swaths of the U.S. economy to shut down while people socially distance and quarantine in order to prevent cases of COVID-19 from overwhelming hospitals.

The impact from the economic halt is likely to be immediate and severe for Florida’s finances. Restaurants, hotels and admissions to places like theme parks and basketball games account for $1 of every $5 the state collects in sales taxes. And sales taxes are in turn responsible for 79 percent of Florida’s general revenue.