Florida Gov. Rick Scott is in a tight reelection fight. Former GOP-governor-turned-Democrat Charlie Crist is neck and neck in the polls to reclaim the office. Scott has stepped up his campaign and has proposed a series of significant tax cuts that he hopes will turn the tide of the election. Like most election-inspired tax reform, Scott's proposals are mostly geared toward collecting votes and have little to do with sound tax policy.
Let's start with the ugly. Scott wants a constitutional amendment to limit property taxes. In general, that's an awful idea. The property tax is good for funding local government services. If it's limited, local governments are forced to rely on state aid to pay for services. That limits local autonomy and puts pressure on the state budget. Florida citizens don't even like the idea -- they have defeated similar proposals in the past, including as recently as 2012.
Worse, Scott would like to adopt $200 million in new sales tax holidays. Every public finance expert who has ever thought about sales tax holidays has unequivocally stated that they are a terrible idea. For Florida, with its heavy reliance on the sales tax, holidays are particularly awful. Someone should tell the governor that sales tax holidays don't work (and that even if they did, they represent everything that's wrong with American tax policy).
That being said, Scott has proposed some good things. He wants to continue phasing out the state corporate income tax. I've been saying for more than a decade that the state corporate income tax doesn't make a lot of sense in today's global economy. Continuing down a path to eliminate a tax that is largely voluntary is a good idea.
Scott has also proposed eliminating the sales tax on commercial leases and manufacturing equipment, both very good ideas. Generally, business purchases should never be subject to sales tax. Those taxes are passed on -- stealthily -- to consumers. The way that particular tax operates is nontransparent. It is not good governance. So Scott should be applauded.
The governor also wants to reduce local telecommunication service sales taxes and car registration fees. Those proposals are intended to appease public unhappiness with both sources of revenue. The registration fee cut will save citizens $25 a year. Who knows -- that may swing the election.
Unfortunately, the property tax limitation and the sales tax holidays will resonate with the electorate. People hate property taxes, and they love to think they're saving money during the holiday. The business tax cuts will no doubt make the business community happy -- no small feat during an election year.
Crist has been silent on taxes so far during the campaign. Perhaps he's still thinking about his gubernatorial pledge never to raise taxes.
