The federal tax plan broadly outlined by the current administration would do very little to create opportunities for Floridians struggling to make ends meet. Instead, the tax plan would provide massive tax cuts for Florida’s highest income earners, accordingly to a recent report by the Institute on Taxation and Economic Policy (ITEP). Broadly outlined, the plan is likely to make an already unfair tax system that favors the wealthy even worse. Specific changes in the tax proposal are also likely to undermine state support for core services, which provide a pathway to self-sufficiency and economic independence for millions of moderate- and low-income Floridians.
Floridians in the highest income bracket, those with projected average income of $2,797,700 for 2018, would each receive an average tax cut of $193,570, or 7 percent of their income, according to ITEP. In comparison, residents in the lowest income bracket, with average income of $13,200, would each receive an average tax cut of just $100, less than 1 percent of their income. This is unlikely to improve the quality of life or help struggling families. Collectively, Floridians in the lowest income bracket would receive less than 1 percent of the total tax cut for the state, compared to those in the highest income bracket, who would receive more than 60 percent of the total tax cut for the state.
The plan would do very little to give middle-income Sunshine State residents a chance to get ahead. A family with a projected income of $42,500 in 2018 would receive a tax cut of $560, or 1.3 percent of their income. Collectively, these families would get 3.5 percent of the total tax benefit for the state. Considering that 44 percent of Florida’s households currently do not earn enough income to pay for basic expenses, such as food, transportation, education and healthcare, the tax plan would do little to give them a path to economic prosperity.
The impact of the tax plan on middle- and low-income Floridians goes beyond direct tax cuts. The plan is projected to reduce federal tax revenues by $4.8 trillion over the next decade, according to ITEP. In all likelihood, reduced federal tax revenues would result in reduced support for Florida’s state budget. Currently, more than a third of that budget comes from federal funds, providing critical support to help struggling families stay afloat through programs such as Medicaid, Medicare and food assistance. With state support for core services at its lowest since the recession and trending downwards, further cuts to the already lean budgets for these programs would have a devastating impact on families. The benefits families would lose from these programs would likely be far greater than the insignificant gains from the proposed tax cuts.
Federal tax reform should seek to make the tax code simpler and require everyone — individuals and businesses — to pay their fair share of taxes while ensuring sufficient revenues to pay for core services. The broadly outlined tax plan falls substantially short of this objective. In fact, it would do just the opposite, cutting revenues needed to pay for critical services and providing significant tax cuts to the wealthiest earners, with little to no meaningful support or opportunities for everyone else.
The Florida congressional delegation should reject the proposed tax plan, including any other similar proposal, and insist on tax reforms that would create opportunities for all Floridians to succeed and boost the state’s economy.