February 10, 2022

Outsized Corporate Tax Giveaway Draws Concern, Criticism From Nonprofits and Advocacy Groups

On January 1, Florida’s corporate income tax (CIT) rate returned to 5.5 percent. The rate reset, which happens to come at a time when nonprofits, advocacy and faith-based groups, and others have been vocal about the need for corporations to pay their share, is expected to generate upwards of $1.2 billion annually in general revenue.

In fact, a group of 31 organizations from across the state, including Florida Policy Institute, Florida Conservation voters, SEIU Florida Public Services Union, and Florida Voices for Health, sent a letter to Governor Ron DeSantis urging him and state leaders to leave the CIT rate as is and reject further corporate tax cuts for the sake of crucial public services, noting that Floridians “need good-paying jobs, good schools, safe and affordable housing, reliable transportation infrastructure, clean water and energy, and a robust safety net.”

Decisions related to the CIT, like other tax policies, are spending decisions that directly impact how much revenue is available to finance the budget. Consequently, if policymakers choose to cut CITs, they will have to make up for the revenue loss by either raising taxes on working Floridians, who already shoulder the tax burden, or underinvesting in crucial programs and services that are already stretched thin. The CIT rate reset, as noted in the letter, is an opportunity to avoid these decisions.

Legislation moving through the committee process, however, threatens to upend important revenue gains from the CIT reset. Senate Bill (SB) 1090 would amend the CIT code in relation to provisions that were passed in the Tax Cuts and Jobs Act of 2017, particularly around bonus depreciation, business interest expense deductions, and how businesses expense research and development expenditures. 

The original version of the bill already came with a hefty price tag: $2.8 billion through fiscal year 2026-27, with no guarantee that the state will recoup this lost revenue in the future. Then, in early February, the legislation was amended — right before it was taken up in its first committee — to provide the richest corporations doing business in Florida with an even larger tax break. The bill sponsor removed language that would have stopped the final $624 million payout under the automatic rate reduction and refund mechanism that sunsetted this year, bringing the cost of the legislation to a whopping $3.5 billion. 

Just last year, another important tax-code bill was amended in a similar manner as it moved through the committee process. Legislation modernizing enforcement of Florida’s online sales tax collection, which initially stipulated that all dollars generated would go directly into the general revenue fund, was amended so that new revenue would instead go to replenish the Unemployment Compensation Trust Fund, a move that turned it into yet another tax break for businesses and another missed opportunity for investing in Florida families. 

State leaders should look to tax code reforms that provide relief to Floridians with low and moderate incomes, not ones that allow corporations to avoid paying their share. Enacting legislation (HB 613/SB 234) to create the Working Floridians Tax Rebate set at 20 percent of the federal Earned Income Tax Credit would boost household income for 2.1 million Floridians and help jumpstart local economies.

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