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Front Page » Opinion » Tastetest The Taxcut Sundae First Ndash And No Cherry On Top

Tastetest The Taxcut Sundae First Ndash And No Cherry On Top

Written by on May 10, 2007

By Michael Lewis
Brace yourself as the Legislature gears up to invent a tax cut that fully satisfies nobody after a bucket of promises turned out half-empty. Anything at all might be shoveled into the recipe to make it sweet enough to swallow.

It’s like a giant banana split: Nobody likes all the gooey ingredients, but there’s enough that tastes good that you can stomach the mish-mosh.

So if a baseball stadium or gambling or any other harebrained scheme slips into a tax bill, lawmakers are going to treat the throw-ins like a giant maraschino cherry: Nobody likes it atop the sundae, but everybody gets it.

We shouldn’t. A tax cut is a tax cut, not a banana split. Throw-in fixin’s don’t belong.

Even aside from the threat of the cherry on top, nobody knows what will be tossed into the tax-cut mix as House and Senate negotiators hash out a formula that all, including the governor, will bite on.

Will they package some species of sales-tax hike with a massive property-tax cut that would drain local coffers, a true revolution in state taxation? Or is it to be merely heavy tax cuts that once would have been draconian but in Tallahassee today would be the more moderate approach?

Will lawmakers double homestead exemptions?

Will homesteaded residents who move be able to carry accumulated property-tax savings around the entire state or just around their home county or nowhere at all?

And will anyone offer anything real to commercial property owners, who have borne larger and larger shares of tax burdens in recent years?

So far, the answer to all is a resounding maybe.

That’s why the next six weeks will be more than uncertain: They will be painful.

Start with homeowners, the focus of lawmakers’ rhetoric in the push to lighten the tax load — at least, that share of it that feeds city and county coffers. Few who’ve long held a homestead exemption will buy or sell until the Legislature sets rules. That means the already-very-slow residential realty market is due for a temporary slowdown — just what it didn’t need.

And who else would buy a home without even a basic idea of the property taxes? Right now, nobody can hazard an intelligent guess.

How will final legislation alter the business climate? Since nobody knows, business decisions will temporarily be stalled, too.

In local government, it’s even worse. Will a city or county lose 5% of property taxes or 50%? Nobody knows, so short-run hiring freezes are likely.

But freezes are only the tip of the iceberg. Governments’ budget years begin Oct. 1, and they must issue tax notices in August. Before that, each must hold two hearings and then adopt a budget with the tax rate. To do all this after the Legislature wraps up a June 12-22 session, governments must compress a six-month process into a few weeks.

At best, they’ll craft budgets with less than normal care. At worst, they’ll panic, groping for what to lop off and what to save as taxes shrink.

So while legislators invent a whole new system of taxation in six weeks, local governments will swing into survival mode.

This is not going to be pretty.

That said, results could be worth it. We all love lower taxes. We complained as governments bloated faster than population or inflation when the late lamented real estate boom ballooned budgets. The next six weeks could help on both ends.

Could, that is, if legislators seek and then heed expert advice on unintended consequences of various proposals to unburden taxpayers and shrink cities and counties and if localities trim true fat rather than the muscle and bone of a strong community.

Both are huge leaps of faith — but possible.

On the state side of the equation, six weeks of big-picture thinking is vital. Lawmakers need quality advice to assess collateral damages or benefits that aren’t readily apparent.

To follow just one trail, what changes in population mix could specific plans trigger?

If property tax-cap savings become portable, a homesteaded resident might be able to spend hundreds of thousands more than a second-home owner or outsider of similar means to buy a high-value property, making up the difference over years in tax savings. This could make Miami-Dade far less attractive to second-home owners, who abound here.

Tens of thousands of residences now in use for only part of the year might then be used year-round. That could strengthen our sense of community but vastly increase costs of services — schools, police and fire, water and sewer, social services and health, highways and more.

Such changes could also repel well-to-do foreigners and the multinational businesses that are vital to our economy.

And as that in turn shrank the pool of eligible buyers in the face of a vast oversupply of condos, an unintended consequence might be to prolong rather than shorten our real estate slide.

That complex pattern is only one of many such webs that might spin out of massive tax-change legislation. Analyzing them all requires unaffiliated economists and experts far more than hired lobbyists or, worse, total inattention.

We failed to do that analysis when we created the 3% cap on assessment increases of homesteaded residences that unexpectedly has become a burden rather than a boon. Now we’re paying the price.

For sure, legislators must think beyond the simple aims of cutting taxes and shrinking local governments to thoughtfully examine these webs.

All agree that both aims, in a vacuum, are worthy. But beyond the inevitable wheeling and dealing in the next six weeks, lawmakers must call upon our wealth of impartial intelligence.

That means more than listening to the lobbyists, the folks back home and each other.

Call on the experts now. Listen to their analyses.

Oh, and watch out for those sugary maraschino cherries. Advertisement