You might think rich folks in Florida have it pretty easy. The weather’s good, there’s no state income tax, and those with, say, $20 million of some stock that pays a 4% dividend saw the federal tax bill on their dividends cut by more than half, from 39.6% to 15%, for an annual saving of $196,800 a year. But that’s federal. When Jeb Bush took office, he surveyed the state’s serious problems (education comes quickly to mind) and decided that the thing to do was to cut taxes on the rich at the state level, as well. Maybe he didn’t have the power to cut them as dramatically as his big brother – because the Florida income tax rate was already zero – but he would do what he could.
Jeb didn’t cut sales taxes. That would have applied to everyone. He didn’t cut property taxes. That, too, would have applied to everyone (renters ‘pay’ property tax in the sense that landlords pass it on to them). No, he found Florida’s Intangible Property Tax, which applies only to the fortunate few, and cut it, as I wrote some time ago – what else? – in half. The rate was cut from two-tenths of one percent of your stocks and bonds (outside a retirement plan, and not including Treasury securities and a few other things) to one-tenth of one percent. The guy with $20 million in stock saves a further $10,000 a year.
About a year later, Bush eliminated drug treatment programs from 51 of Florida’s 55 prisons to save $13 million needed to balance the budget.
Now come the forms for this year’s 2004 Intangible Property Tax, with further relief for the best off. To quote the very first copy block at upper left – ‘Effective January 1, 2004, Governor Bush and the [solidly republican] Florida Legislature have raised exemptions for individual filers from $20,000 to $250,000 and for joint filers from $40,000 to $500,000.‘
A twelve-fold hike in the exemption, saving the single guy $230 a year and joint filers $460.
(Remember, most Floridians were already exempt, because this tax did not apply to their homes, cars, cash, businesses, savings bonds, or retirement plans.)
The truth is, I like reforms that simplify tax filing, and raising the exemption twelve-fold will relieve quite a few folks from having to file the Intangible Property Tax at all. That’s good.
But if you’re going to do this, why not make it, at the very least, ‘revenue neutral?’ That is, why not raise the exemptions twelve-fold so fewer have to file but, at the same time, hike the rate back up a hair from one-tenth of a per cent to perhaps 0.11% or 0.12%? Same revenue generated, but fewer people having to file returns and less paperwork for the state.
Indeed, why not admit that Florida is failing its children with overcrowded classrooms and put the rate back to two-tenths of one percent, where it had been for so long, but with these higher exemptions?
The answer is simple: For the Bushes, tax cuts for the best off are priority #1.
That’s not an attack on the Bushes, just a statement of reality. Some, recognizing this for the simple fact it is, will share the Bush vision and applaud. Others will gape in wonder and be appalled.
Meanwhile, Florida’s budget crunch and classroom overcrowding are so severe that there is talk in Dade County of making twelfth grade optional.
I doubt that will ultimately happen, but I don’t doubt this: It is a grand time to be rich and powerful in America. Just ask any of your friends with $20 million in stock.
‘If this is class warfare, then my class is winning.’
– Warren Buffett
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The people who sustain the worst losses are usually the ones who overreach. And it's not necessary: steady, moderate gains will get you where you want to go.~John Train
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