Tax Refund for Working Floridians Fixes Upside-Down Tax Code

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Super yachts docked at Island Gardens Marina during the 2022 Miami Boat Show on Thursday.

pportal@miamiherald.com

I often hear Florida referred to as a “low tax” state.

But this statement is misleading.

Florida is maybe “low tax” if you are one of the 466 corporations that earned over $50 million in 2019 and paid no corporate income tax.

Florida is maybe “low taxes” if you buy a yacht because sales taxes on boats are capped at $18,000.

A reality that is not a maybe? The benefits of a “low-tax” state are not shared equitably. The fact that we have no personal income tax means that Florida is highly dependent on sales and excise taxes. And while tourists and businesses pay sales taxes, local households contribute the lion’s share.

Upside down tax code

Research shows that all of this promotes an upside-down tax structure where low-to-moderate income Floridians bear the highest tax burden, and those at the top get the lowest taxes and then get the most in return.

As it stands, our tax code is the second most overthrown in the entire country. Those at the top typically only use an average of 4% of their money to pay state and local taxes, compared to those earning less than $24,000, who spend between 10% and 13% of their income.

If that already sounds unfair to you, now add a shortage of affordable housing, increased food insecurity, rising costs of everyday consumer goods, and other factors that disproportionately hurt low-wage earners.

Obviously, there is something wrong with this picture. The upside-down state tax code needs an overhaul.

This legislative session, we have the opportunity to pass real tax relief that will increase incomes for those who need it most.

Legislation I recently introduced, Senate Bill 234, would create the Working Floridians Tax Refund (WFTR) program modeled after the federal Earned Income Tax Credit (EITC), s he was adopted. The EITC is an effective tool that lifts millions of Americans out of poverty every year. It’s so powerful in reducing poverty and reviving economies that 30 other states, DC and Puerto Rico have their own local versions.

Tax refund plan

If adopted here in Florida, the WFTR would benefit millions of Floridians who disproportionately belong to communities of color, including more than 600,000 households in Broward and Miami-Dade counties, according to a recent report by the nonpartisan Florida Policy Institute. Many of these residents – our cashiers, practical nurses, servers and security guards, to name a few – are essential workers, people on the front lines of the pandemic who have kept stores open and services running in our communities in the face of impossible conditions.

It is clear that we, as a society, must do more to invest in our people and our communities. This is how we will ensure long-term success and prosperity for working families. By putting more money in the pockets of families, Floridians will have money to spend directly in communities. The REIT report found that WFTR would increase families’ disposable income and inject approximately $862 million each year into the state’s economy, including $243 million in Broward and Miami-Dade, with millions flowing back into our communities as people spend their rebates at local businesses.

money in the pockets

Imagine, for example, a young couple with two children living in Miami. One parent works as a retail salesperson, the other is a full-time cashier at a local grocery store. Together, they earn $40,000 a year before federal taxes. Throughout the year, they spend nearly $3,500 paying state and local taxes. WFTR could allow them to apply to the Florida Department of Revenue for a refund equal to 20% of their federal EITC – putting $560 back in their pockets – enough to buy groceries for the family, get their vehicle or cover childcare for the month.

It’s not too late to start fixing Florida’s broken tax system. We’re behind the times nationally, but with WFTR, we have an opportunity to lay the foundation for a tax system that really works for everyone.

Shevrin Jones is a Democratic Senator representing District 35.

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Jones


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