Florida Would See an Extra $577 Million in Sales Tax Revenue Under Amendment 2

Florida Would See an Extra $577 Million in Sales Tax Revenue Under Amendment 2

As Florida Policy Institute and many others have demonstrated, gradually increasing the minimum wage to $15 per hour by 2026 would help lift households out of poverty and reduce pay inequities long experienced by women, people of color, and immigrants. Additionally, a new analysis by the Institute on Taxation and Economic Policy (ITEP) shows that Amendment 2 would boost sales tax revenue to the tune of $577 million by fiscal year 2026-27. (See Fig. 1.) In the wake of the COVID-19 crisis that has led state economists to anticipate a substantial budget shortfall in the coming years, boosting wages for Floridians — who contribute more to sales tax revenue than tourists and businesses combined — makes financial sense.

In Florida, paying attention to sales tax collections is crucial because they account for over 75 percent of Florida’s General Revenue Fund; this fund, in turn, supports vital public services statewide (e.g., education, health and human services, and criminal justice and corrections). This week, Florida’s Office of Economic and Demographic Research (EDR) released its September revenue report, which reveals signs of post-pandemic recovery, largely driven by sales taxes. While sales tax revenue is down $239 million compared to this time last year, the current figures are above EDR’s expectations. Senate President Bill Galvano, in a memo to senators, stated that he was “optimistic because of the positive news in [EDR’s] report.”

As ITEP shows, Floridians who bring home just under $19,000 annually contribute eight times more of their family income to sales tax revenue than those who earn over $549,000 annually. (See Fig. 2.)

This explains why Florida is considered a high-tax state for residents bringing home low to moderate income – precisely the Floridians who would benefit most from Amendment 2’s gradual minimum wage increase. Moreover, Florida households contribute nearly five times more than tourists and three times more than businesses to overall sales tax collections. (See Fig. 3.) This means that when it comes to sales tax revenue, Floridians will carry the state’s recovery, ahead of tourists and businesses. 

In effect, gradually raising the state minimum wage under Amendment 2 makes financial sense. As Florida prepares to manage a pandemic-related budget shortfall totaling at least $5.6 billion over the next several years, lawmakers will need to make smart revenue choices to keep the state afloat.

Increasing the minimum wage would make this daunting task much easier and be a major step toward shared prosperity, benefitting more than 1 in 4 working Floridians, countless local businesses, and the state’s finances.

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