Florida lawmakers quietly approved $340 million tax break for big companies
Lawmakers quietly approved at least $340 million in tax cuts for large businesses this session. One critic said the decision limited what individuals got in tax relief.
HB 7127 has received none of the fanfare that accompanied a separate measure containing $121 million in tax cuts, mostly for shoppers during salestax holidays for hurricanepreparedness supplies and back-to-school items.
Gov. Ron DeSantis signed that bill (HB 7123) into law last week at a news conference in Palm Beach County.
The corporate tax break popped up in the House in the seventh week of a nineweek legislative session and while House Democrats opposed the bill, it received only one no vote in the Senate. It hasn’t yet been sent to DeSantis’ desk.
“You’re going back to a feudal type system where you’re hoping the lords and ladies will grant the peasants a little bit of cash on the back end,” said Rep. Evan Jenne, D-Dania Beach. “It’s just, ‘We lowered taxes,’ and no one really asks, ‘Well, what taxes did you actually lower?’ ”
The bill is a complicated measure related to the tax-cut law passed by Congress and signed by President Donald Trump in December 2017. It lowered rates for corporations but also closed loopholes and eliminated or reduced the amount of different types of deductions that companies could file in an attempt to simplify the tax code.
Overall, large businesses saw their tax burdens lowered, but at the state level, their liabilities increased in many cases, sending many of them to lobby state capitols around the country to cut their state taxes, too. Last year, Florida lawmakers reacted by capping the amount of corporate income tax that the state would receive and offering rebates to businesses for any overages.
In the bill, which was lobbied for this year by large business lobbies such as the Florida Chamber of Commerce and the Florida Retail Federation, they extended that rebate and rate reduction two more years, through 2021.
Republican supporters of the bill said they were merely trying to do the same thing this year — hold businesses harmless and stall to get more information about how the federal tax law would affect the state and corporations, since many businesses have filed extensions and have yet to pay the taxes for the 2018 calendar year, the first year the law was in effect.
“We’re continuing the policy for another fiscal year until we’re able to judge the impacts of the federal tax legislation,” Senate budget chief Rob Bradley, R-Fleming Island, said during budget talks last month. “I think that’s the prudent thing to do. The overall goal is to maintain the status quo. And we’re going to be back here in five months revisiting it all.”
But another provision in the federal tax law was the creation of the global intangible low tax income, designed to reduce the incentive for large conglomerates to stash profits in offshore tax havens.
In HB 7127, lawmakers agreed to “decouple” Florida’s tax laws from that federal provision.
State economists said they had little information to project how much the bill would cost the state but estimated it would be at least $340 million next year, according to a forecast of the impacts of the bill. The precise impact is “indeterminate,” they wrote.
The analysis didn’t include which companies might benefit or by how much.
Democrats contend that large tax cut meant other tax-reduction ideas were removed completely, such as the communicationservices tax cut, or were reduced, such as the tax cut for business rents. It was originally slated to drop 0.35 percent but was cut only 0.2 percent in the bill signed by DeSantis.
Moreover, that money could’ve been used for other things, such as helping the Panhandle recover from Hurricane Michael or preventing the $125 million sweep of the affordablehousing trust fund.
“None of it will end up saving the average Floridian any money whatsoever,” Jenne said. “Every year they make a big deal about their tax cuts, but at the end of the day typically they’re for the very wealthy and for large corporations.”
But Republicans said their goal wasn’t a large corporate tax cut but to shield large businesses from the impacts of the federal tax law, and wait until more information is gathered before settling on a permanent solution.
“This isn’t a corporate giveaway or anything of that sort,” said Rep. Bryan Avila, R-Miami Springs, sponsor of the bill, when he introduced the measure in committee last month. “I would say this is really buying time for the Legislature.”