Not this year, and not next year, but if the current trend in property tax cuts continues, we'll have a state income tax here in Florida. We'll have to--the current plan is unsustainable.

TALLAHASSEE - Florida voters will decide in November on a ballot measure that would cut property taxes across the board by an average of 25 percent, or $9.5 billion, while directing state legislators to replace the revenue by raising sales and other taxes.

Opponents said the amendment would almost certainly lead to a sales tax on services — everything from dry cleaning to legal fees — similar to one that was withdrawn after a huge public outcry more than 20 years ago.
But sales taxes will only replace part of the revenue lost by this massive of a cut--and remember, tax rates aren't the real problem with the housing industry in Florida. It's the bursting of a bubble--inflated housing prices are the culprit. You can reduce taxes to zero and a couple making $55K (about the median in Florida) won't be able to afford a $300K house.

A surprising moment of truth popped out in the debate:

"This will kill off government," said Commissioner Randy Miller, director of the Florida Retail Federation.
Miller says this as though the people pushing this move don't know it and he's warning them against it, but the fact is that anti-tax advocates are hoping to kill off government to the greatest extent possible. And we, the average citizens, will be the ones who suffer as a result.

So how does this translate into a income tax? It's really just a guess on my part, but by enshrining these tax cuts in the state Constitution, it leaves state lawmakers with fewer options to raise revenue, and make no mistake about it, these tax cuts will be ruinous. We're already seeing the effects of the coming tax cuts in the cutbacks of local services by cities planning for less money during the next assessment, and this would cut 25% of those funds. No one can absorb that sort of loss, especially when the people in charge acknowledge that sales tax increases will only recoup a small fraction of the lost revenue. Legislators will have to look elsewhere, and an income tax, even a small one, is a reasonable place to look. It may be a third rail of Florida politics right now, but when times get really bad--and they will, and it will happen soon--those third rails get a little less juice in them.

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