Florida Needs to Balance the Scales If It Wants to Cut Taxes

Throughout Florida Gov. Ron DeSantis’ (R) tenure, policymakers have opted for Band-Aid solutions such as sales tax holidays while permanently collecting more sales taxes on online purchases to lower taxes for businesses.

This makes current legislative proposals to lower the state’s general sales tax a significant policy shift that—if adopted equitably alongside a revenue option—would offer relief. However, there are issues that policymakers ought to consider to ensure that permanent tax changes benefit those who need it the most.

The Florida House of Representatives’ omnibus tax bill, HB 7033, proposes a 0.75 percentage-point reduction to the state’s 6% general sales tax that intends to offer about $5 billion in annual savings to consumers. The Senate’s tax package also includes a permanent sales tax exemption on clothing and shoes with a sales price of $75 or less per item, which state economists estimate could save consumers $963 million to $1.1 billion annually.

DeSantis has urged legislators to focus on property tax relief by offering $1,000 rebates to homeowners of homesteaded properties as part of his “long-term goal of eliminating property taxes through a constitutional amendment.” Like the House’s plan, DeSantis’ rebate proposal would provide $5 billion in relief.

Although these proposals aim to help, they would be inequitable because:

• The House’s permanent one-size-fits-all sales tax reduction, along with the Senate’s permanent sales tax exemptions, would benefit all consumers, including tourists and wealthy residents
• The one-time property tax rebates would exclude an estimated 2.7 million households who rent, while also benefiting wealthy homeowners
• Eliminating property taxes via a constitutional amendment would lead to massive budget shortfalls in local governments and school districts

If lawmakers want to offer tax relief, they should also consider options that are targeted to those who need it the most. For example, there is a proposal in the House (HB 1331) and Senate (SB 1158) to create a state version of the federal earned income tax credit, known as the Working Floridians Tax Rebate program, which would be targeted to Floridians earning low- to moderate-income.

Nonetheless, without a plan to raise revenue to pay for whichever policy becomes law (if any), Floridians will pay for relief with budget cuts. The legislative proposals have no options to raise funds, though some policymakers have voiced support for raising $2.4 billion by closing corporate income tax loopholes that allow corporations to shift profits into tax havens to lower their tax bills.

Nearly 50% of households in Florida have trouble affording necessities such as housing, child care, food, transportation, and health care. Three-quarters of Florida prisons lack air conditioning because of resistance from policymakers. More than 2.5 million Floridians are without health-care coverage, and thousands of homebound adults and disabled individuals are on waitlists for home and community-based care. Yet state and local funding for public services has trailed behind most of the country.

Policymakers have turned down federal funds for programs such as Summer Electronic Benefits Transfer and Medicaid expansion while not raising revenue, despite nearly a projected $7 billion deficit in fiscal 2027-2028.

To make matters worse, according to the Institute on Taxation and Economic Policy, Florida has the most regressive tax code in the country. This is a result of a state government that relies on consumption taxes for 75% of its general revenue.

All of this is happening as the federal government is contemplating drastic cuts to social services. Given that $3 out of $10 in Florida’s state budget come from federal sources, any decision to cut taxes now could have cascading consequences if federal support shrinks. Without a concurrent plan to raise revenue, today’s tax breaks may become tomorrow’s budget crisis. Floridians can’t afford short-term relief at the expense of long-term resilience.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Esteban Leonardo Santis is a policy analyst at Florida Policy Institute, where he focuses on advancing policies and budgets that improve the economic mobility and quality of life for all Floridians.

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