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Florida - More Inequity Over Property Taxes

by William C. Coleman III, Orlando, October 2012

Businesses' share of property taxes has risen nearly 20% during the past three years in Florida, while the amount paid by homeowners has fallen.

 

The situation may get even more lopsided if Amendment 4 wins voter approval in November. Officials say if it passes, the tax burden will be disproportionate among similar commercial properties vying for the same tenant base.

 

Why is the Tax Burden Rising for Businesses?

 

Florida doesn't have a personal income tax so most state and local services are funded by property taxes and sales taxes.

 

When the real estate market was booming, owner-occupied residential properties were protected by homestead laws. Businesses and snowbirds paid much higher taxes.

 

During the recession, both homeowners and snowbirds saw their property values decrease. As a result, businesses were left to pick up the tab, according to a report by the Herald-Tribune.

 

Businesses are also paying more in personal property tax. Three years ago, property taxes levied on business equipment and improvements amounted to 5.5% of all property taxes. Now it's 7.3% or $854 million.

 

Going from Bad to Worse

 

Florida voters will decide whether to lower the tax cap on non-homestead property from 10% to 5% on November 6th. While this may sound like it would cut business taxes, the Florida Building Owners and Managers Association (BOMA) says that's not the case.

 

BOMA explains, "If Amendment 4 passes, commercial properties will bear the burden of under-assessed residential and already constructed commercial structures. BOMA Florida supports reduced tax burdens and fairness in taxation, but tax caps neither reduce taxes fairly, nor render a fair taxation system. With tax caps, the tax burden is disproportionately distributed among owners, favoring those 'first in time' who have secured a lower assessment."

 

The Association goes on to say that with pricing at an artificial low in Florida, and price discovery on both residential and commercial properties so unstable, now is not the time to implement sweeping changes in the tax burden.